Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRISTOL CORPORATION BILL [Lords]

SHAKESPEARE BIRTHPLACE, &C., TRUST BILL [Lords]

Read a Second time and committed.

ARGYLL COUNTY COUNCIL (ARINAGOUR AND CRAIGNURE PIERS, ETC.) ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Argyll County Council (Arinagour and Craignure Piers, etc.) presented by Mr. John Maclay; and ordered (under Section 7 of the Act) to be considered upon Monday next and to be printed. [Bill 134.]

GLASGOW CORPORATION ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Glasgow Corporation, presented by Mr. John Maclay; and ordered (under Section 7 of the Act) to be considered upon Monday next and to be printed. [Bill 135.]

NATIONAL TRUST FOR SCOTLAND ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to the National Trust for Scotland, presented by Mr. John Maclay; and ordered (under Section 7 of the Act) to be considered upon Monday next and to be printed. [Bill 136.]

Oral Answers to Questions — KENYA

Situation

Mr. Stonehouse: asked the Secretary of State for the Colonies if he will now make a further statement on the situation in Kenya.

The Secretary of State for the Colonies (Mr. Iain Macleod): As regards the political situation, I would refer the hon. Member to the statement which my hon. Friend made on 30th May, in reply to the hon. Member for Cardiff, South-East (Mr. Callaghan). As regards the security situation, the Kenya Government are taking all necessary measures to counter subversive activities in the Rift Valley and in Meru district. Fifteen persons who administered or helped to administer oaths in Meru have been dealt with by the courts and seventeen cases are awaiting trial. A curfew has been imposed on the affected part of the district since 25th May and movement into and out of a specified part of the Imenti forest area is prohibited. Police and K.A.R. are operating in the forest with the object of tracing and arresting any remaining oath administrators.

Mr. Stonehouse: Is the Colonial Secretary aware that there is a great deal of confusion and dismay in Kenya about the political situation? There is a need for some clarity from him. Does he accept the interpretation Lord Salisbury has expressed in the correspondence columns of The Times, namely, that he has established a new principle in his treatment of the Kenya position? Does he now accept the advice of some of his supporters on the benches behind him that the best way to establish stability in Kenya is to release Jomo Kenyatta?

Mr. Macleod: Regarding the letters in The Times, as another letter from one of my hon. Frends pointed out a day later, I had said this before on a considerable number of occasions. As for the political situation in Kenya, it is important to remember that there have been a great number of votes since the Legislative Council met. On all those the Government have commanded a


substantial majority, and in every single case a majority of elected representatives as well.

Mau Mau (Former Detainees)

Mr. P. Williams: asked the Secretary of State for the Colonies what special action is being taken to watch ex-Mau Mau detainees.

Mr. Iain Macleod: Before Mau Mau detainees were finally released it was the normal practice for them to undergo a period on probation under the supervision of their local Chief and District Officer in order that the Kenya Government could be fully satisfied that their release would not constitute a threat to public security. The Kenya Government have taken swift action wherever there has been a resurgence of Mau Mau type activities. This is an aspect of the security situation over which the Kenya Government are keeping the closest watch.

Unlawful Oaths

Mr. Turton: asked the Secretary of State for the Colonies how many persons were charged with administering or taking unlawful oaths, and of belonging to or managing an unlawful society in connection with Mau Mau activities, during May, 1961 in Kenya.

Mr. Iain Macleod: Twenty-eight persons were arrested and charged in May with administering or taking oaths in connection with Mau Mau. No persons were charged with managing an unlawful society.

Mr. Turton: In view of the alarming renewal of Mau Mau activities which these figures reveal, will my right hon. Friend make greater efforts to identify the headquarters of these Mau Mau cells and also the ringleaders of these activities?

Mr. Macleod: Certainly, but I think that my right hon. Friend, who is well informed on these matters, will know that the special branch information in Kenya is pretty good and that we have very close tabs indeed on the headquarters and the personnel of these different movements.

Mr. Snow: Having in mind the recent cases of conveying fraudulent telegrams

designed to stir up inter-racial tension, will the Secretary of State pay close attention to a tendency which, I think, is becoming apparent, namely, the use of the very sinister name "Mau Mau" by persons who are somewhat irresponsible?

Mr. Macleod: It is true, of course, that a number of oaths which are taken have nothing to do with Mau Mau. That is a perfectly fair point and well made, if I may say so. On the other hand, it is equally true that some of the outbreaks of oathing recently have had very disturbing features indeed which are clearly connected in some way or other with the unhappy days of the emergency.

Mrs. Castle: Will the Secretary of State confirm that in the recent murders and other acts of violence, which we all deplore, there has not been any connection traced with any political motive?

Mr. Macleod: People are under arrest in connection with the first charge and, therefore, I do not wish to go into detail. No evidence has come to light so far in either case which could identify these acts as political.

African Families (Land Settlement)

Mr. Goodhart: asked the Secretary of State for the Colonies how many African families it is now planned to resettle on land owned by European farmers in Kenya in the course of the next two years.

Mr. Iain Macleod: The scheme for which funds are already in view should provide for about 6,300 families; schemes for accelerated re-settlement are currently under discussion.

Mr. Goodhart: Is my right hon. Friend aware that some responsible people in Kenya have plans for settling as many as 25,000 families in the next four months? Would my right hon. Friend look sympathetically at this problem?

Mr. Macleod: Within the last few hours I have received from the Council of Ministers in Kenya new proposals on this matter which I will study carefully.

Freedom Land Army

Mr. Goodhart: asked the Secretary of State for the Colonies how many individuals, thought to be members of


the Freedom Land Army, have been arrested or detained in Kenya in the last four weeks.

Mr. Iain Macleod: Fifteen such persons have been proceeded against during the last four weeks and all have been restricted. None has been detained.

Mr. Goodhart: In view of the very strong condemnation by Ministers and other responsible people in Kenya, is not this a rather small action to take against this subversive organisation?

Mr. Macleod: I am certain that the Kenya administration has taken action whenever they feel there is a case that can stand up in the courts. The figures which I have given are presumably a measure of that.

Oral Answers to Questions — THE WEST INDIES

Leeward and Windward Islands (Self-government)

Mr. Brockway: asked the Secretary of State for the Colonies if full self-government will be extended to the Leeward and Windward Islands before independence is recognised for the West Indian Federation in 1962.

The Under-Secretary of State for the Colonies (Mr. Hugh Fraser): This is one of the many questions which is being considered at the conference which opened at Lancaster House on 31st May, and which is still going on.

Mr. Brockway: As the Federation, we all hope, will attain independence next year, is it not desirable that these two groups of islands should at least have some experience of self-government before independence? Is it not also desirable that economic aid should be given to enable self-government to be effected?

Mr. Fraser: I thank the hon. Gentleman for his proposals. These are precisely the sort of points we are discussing at the conference now. It is quite clear that there will be independence for these islands at the latest at precisely the same moment as independence for the other territories.

Mr. G. M. Thomson: Is it not a fair and reasonable principle that all the various units of the West Indies which are entering into an independent Federa-

tion should enter into it from exactly the same stage of self-government?

Mr. Fraser: That is also a point which I shall bear in mind, but we are discussing these very points at the conference.

Doctors

Mr. Grey: asked the Secretary of State for the Colonies (1) how many West Indian medical students are at present being trained in medical schools in the West Indies, in Britain, in other Commonwealth countries and in other foreign countries, respectively; and what was the total number of West Indian doctors qualifying and entering practice in the West Indies in 1960;
(2) how many doctors are required in the West Indies to meet the needs of the people.

Mr. H. Fraser: I do not at present have this information nor the last current projection of need but have sought both and will send particulars to the hon. Member as soon as they are available.

Mr. Grey: Does the Minister feel that sufficient has been done in the various countries, and will he say whether there are sufficient medical students being trained to fit the needs of the parts of the world mentioned in my Question?

Mr. Fraser: I should like to see the figures first. Perhaps the hon. Gentleman will put down another Question in due course.

Emigration to the United Kingdom

Mr. Sorensen: asked the Secretary of State for the Colonies if he has conferred, or will confer, with the representatives of the West Indies Governments now attending the London Conference in respect of the problem of immigration from the West Indies and elsewhere into this country.

Mr. Iain Macleod: The question of immigration from the West Indies to this country is one of the many questions which the representatives of the West Indies Governments have proposed for discussion.

Mr. Sorensen: Does the Minister mean that during the present time, when these representatives are in London, some consultation has taken place? If so, can he say whether the representatives have been impressed by the complexity and indeed the urgency of the problem?

Mr. Macleod: Yes, Sir. We have already had at Lancaster House some discussion on this matter. The hon. Member, of course, will not expect me to give full details on it pending the conference report but the members of the unit territories concerned put their point of view forcibly to me.

Mr. C. Royle: Has the right hon. Gentleman's attention been called to suggestions that the Government are contemplating immediate restrictive legislation on immigration? Does he not feel that this suggestion at this moment might throw a spanner into the works of the London conference?

Mr. Macleod: With respect, these suggestions have not emanated from the Government. The position of the Government has been stated by myself, by my right hon. Friend the Home Secretary and by a number of other Members, and when we discussed this matter at Lancaster House I had no change in that position to announce to the conference.

Mr. Callaghan: Will the right hon. Gentleman confirm that the view among many responsible West Indian leaders is that they have no particular desire for their people to emigrate to these islands but until there is sufficient capital in the West Indies to relieve their own unemployment they have no alternative?

Mr. Macleod: This is a problem which we shall be taking up at Lancaster House tomorrow morning.

Oral Answers to Questions — ST. HELENA

Nutritional Standards (W.H.O. Report)

Mr. C. Hughes: asked the Secretary of State for the Colonies what action has been taken following the Report of the World Health Organisation on Nutritional Standards in St. Helena.

Mr. H. Fraser: As the reply is rather long I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Hughes: Does not the Report of the World Health Organisation reveal very great defects in the diet of the people of St. Helena, and will the hon. Gentleman ask his right hon. Friend to approve additional subsidies on essential foods so that the standard of the health of the people may be raised?

Mr. Fraser: When the hon. Gentleman looks at my Answer he will find that there has been an increase in some subsidies, but this movement was going on previously and was confirmed by the Report of the World Health Organisation. A movement in this direction had already been made by the St. Helena Government.

Following is the reply:
The following developments have taken place in relation to matters referred to in the Report of the World Health Organisation's Nutritional Consultant:

(i) Economic status. The wages of workers in the hemp industry and Government employees have been raised. The import duty on food and clothing has been reduced and corned beef and cheese added to the list of subsidised foods.
(ii) Vegetables and fruit. Materials have been ordered for the irrigation of the Government farm at Longwood and for gardens in Jamestown. Government assistance, including advice and supply of planting materials, is given to owners of market and home gardens as part of a land improvement scheme. Fisher's Valley is now irrigated and is being brought into production, An entomologist was employed for two years and his report on insect pests has been made available. The introduction of a scheme for pest control is under consideration. All the produce from school gardens is now distributed free to school children, including the fruit at two large schools, and progress is being made with fruit growing at other schools.
(iii) Animal food production. A plan for increasing catches of fish for home consumption and improved distribution has so far been held up by the shortage of fishermen and the lack of interest on their part and by prejudice against frozen fish. Some assistance to fishing is being provided by building boat sheds and the supply, at cost, of repair materials and equipment for boats Efforts are being made to increase production of meat, milk and eggs by improving pasture and reclaiming barren land especially by fencing and by eliminating free-ranging goats. A Hereford bull and a Cheviot ram were recently imported in an effort to improve the island's livestock. The supply of dried milk from UNICEF which was interrupted has now been resumed.
(iv) Anaemia. When necessary iron is administered to pregnant and lactating women.


(v) Vitamin A deficiency. The supply of Vitamin A capsules from UNICEF which was interrupted has been resumed.
(vi) Ascorbic acid deficiency. Ascorbic acid is administered where there is evidence of deficiency.
(vii) Children's growth. Height and weight records are kept.
(viii) Maternity and child welfare. The instruction of mothers in the preparation of dried milk and the feeding of infants has been intensified.

A great part of Government resources has been devoted to improvement in the standard of living and the development of agriculture and most of the above measures are only in part the consequences of the Nutrition Report

Medical Services

Mr. C. Hughes: asked the Secretary of State for the Colonies what medical services are now available in St. Helena; and if he will make a statement.

Mr. H. Fraser: St. Helena has a well-equipped hospital, and a senior medical officer and a medical officer are available for the care of the population.

Mr. Hughes: Can the hon. Gentleman now say whether, in view of the distance between St. Helena and the nearest large hospital at Cape Town, there is a competent surgeon serving in St. Helena who is capable of performing operations?

Mr. Fraser: Since the hon. Gentleman last asked a question in December, 1960, there has been an improvement. The senior medical officer is capable of performing major surgical operations.

Oral Answers to Questions — MALTA

School Dental Officers (Transport)

Mr. Awbery: asked the Secretary of State for the Colonies how many cars are allotted to the five school dental surgeons of Malta in order to carry out their work; what is the financial saving of this method of transport compared with the use by each officer of his own car at a fixed mileage rate; if he can state the loss of time caused to each officer in using public transport instead of his own car; and which of these methods is the more efficient for carrying out the duties required of these officers.

Mr. H. Fraser: One hired car is allotted to school dental surgeons. The financial saving could only be calculated

if it were known what each officer would claim when using his own car. I am satisfied that if there is any loss of time it has no noticeable effect on the efficiency of the officers concerned.

Mr. Awbery: Is the hon. Gentleman satisfied with the present position—that there should be one car between five officers on three days a week? These men have been on strike, as far as their cars are concerned, for a considerable time, and the delay is creating bitterness. As instructions are given from this country to the G.I.C. in Malta, will the hon. Gentleman give instructions for a recall of this committee in order that this dispute may be settled?

Mr. Fraser: I think that the hon. Gentleman is exaggerating the position. The whole question of motor cars was gone into by a Departmental committee, and it has been found that, without much loss of time, considerable economies have been made in the finances of the island of Malta.

Mr. Awbery: But can the hon. Gentleman give the cost of paying these dental surgeons on a mileage basis, compared with the cost now in transport and loss of time?

Mr. Fraser: I am convinced that this is the correct solution, which I am fully confident the Governor and the Council of Malta will achieve.

Oral Answers to Questions — NORTHERN RHODESIA

Students (Overseas Study)

Mr. Swingler: asked the Secretary of State for the Colonies (1) what steps his department is taking to encourage students in Northern Rhodesia to take up offers of educational facilities abroad;
(2) how many Northern Rhodesian African students are at present studying in the United States of America; and how many scholarships in the United States of America have been offered to Northern Rhodesians in the last twelve months.

Mr. Iain Macleod: Every advantage is taken of offers of educational facilities abroad, especially where appropriate courses are not at present available locally and where the quality and condition of


courses abroad are known to be satisfactory.
I understand from the Governor that fifteen Northern Rhodesian African students are at present studying in the United States. During the past twelve months a further eight scholarships have been awarded.

Mr. Swingler: Is the Secretary of State aware that I have been informed that, within the last three months or so, scholarships have been offered from the United States to Northern Rhodesians, conditional on certain expenses being covered by the Federal Government, and that the Federal Government have turned them down? The result is that these facilities are not available. Will the Secretary of State check whether this is correct and, if it is, will he take appropriate action?

Mr. Macleod: I will indeed check on this matter. I have seen a report which, I think, may be the one to which the right hon. Gentleman has referred, in the Guardian some time ago on this matter, but I understand that the position is not, as far as Northern Rhodesia is concerned, that these have been rejected, but that they are still being considered.

Mr. G. M. Thomson: Does not the Secretary of State agree that this raises an important issue and will he do everything he can to discourage some of his officials in Africa from looking down their noses at offers of American educational assistance and regarding this as our private educational preserve? Will the right hon. Gentleman do everything he can to encourage co-operation in educational matters with the United States authorities?

Mr. Macleod: I am sure that that co-operation is there but, naturally, one can form an adequate scholarship level of people going to universities only where there is an adequate secondary school educational level from which to draw these scholars. It is largely on that matter that Governments in East and Central Africa have been concentrating.

Mr. G. M. Thomson: But often the objection is at the other end in the view taken of the quality of the education being offered at American institutions. Will the Secretary of State bear in mind that,

in view of the tremendous educational needs of these areas, it is a serious matter to turn down reasonable offers of educational help from the United States?

Mr. Macleod: I agree, but, on the other hand, it is necessary that the Governments of those territories should be satisfied clearly of the quality of the education offered to them.

Native Courts (Sentences)

Mr. Loughlin: asked the Secretary of State for the Colonies how many sentences of under three months duration have been imposed by the native courts of Northern Rhodesia in the year 1958, 1959 and 1960; and under what regulations the right of appeal against such sentences is refused.

Mr. Iain Macleod: To furnish exact figures would call for a survey of over 150,000 criminal cases in the three years in question. In the overwhelming majority of these, however, any sentences of imprisonment imposed were of less than three months. The only limitation on the right of appeal is that contained in Section 33 of the Native Courts Ordinance, and this is about to be abolished.

Mr. Loughlin: Is the Secretary of State aware that there is great anxiety, particularly in the present explosive situation, about the enormous number of people who are now receiving sentences of less than three months for the most trivial offences—even to the point of being sentenced for holding indoor and outdoor meetings? In view of this explosive situation, will the right hon. Gentleman do something to temper the position in the Province?

Mr. Macleod: I think that the point made in the hon. Gentleman's supplementary question is dealt with in my main Answer. The new Native Courts Ordinance now has the Royal Assent and I hope that it will come into effect next month.

Mr. Kenneth Kaunda (Deportation Orders)

Mr. Loughlin: asked the Secretary of State for the Colonies if he will give the grounds on which Mr. Kenneth


Kaunda was recently served with deportation orders on five occasions in the Northern Province of Northern Rhodesia.

Mr. Iain Macleod: These removal orders were issued in June and July, 1960. They were made by the native authorities concerned because they considered that Mr. Kaunda's presence in their areas at that time was likely to jeopardise law and order.

Mr. Loughlin: While thanking the Secretary of State for that reply, may I quote from an article in the 30th April issue of African Life?

Mr. Speaker: Order. Quotations from books, speeches or the like are out of order at Question Time.

Mr. Loughlin: Thank you, Mr. Speaker. I wish to point out that this report reveals that there have been recent deportations. Does not the Secretary of State think—in view of the explosive situation which I mentioned in my supplementary question to Question No. 8—that there should be disclaimers when statements of this kind are made, because these papers have a wide circulation among the native population?

Mr. Macleod: The hon. Gentleman must look at this in the circumstances of the time. This was a considerable time ago—almost a year ago—following a period of great tension when there were outbreaks of violence, especially on the Copperbelt in May of last year. As fat as I know, no recent deportation orders have been served, as suggested in the hon. Gentleman's Question.

Mr. Callaghan: Is Mr. Kaunda now free to visit these areas and to organise meetings provided that they are con- ducted in an orderly way?

Mr. Macleod: I imagine so, but I will have to check that point. I assume that the deportation orders made in the summer of last year have lapsed.

Mr. Brockway: The Secretary of State has said that these deportation orders were made a year ago. Can he give an assurance that, in view of the great influence of Mr. Kaunda against violence in Northern Rhodesia, he will have liberty to hold meetings in the Northern Province?

Mr. Macleod: My hon. Friend and I have answered that question several times. We have made careful inquiries into the allegations that have been made about events in the Northern Province and I am satisfied that there is, and will be, no interference with the rights of people to hold ordinary political activities there.

Fire Danger

Mr. Rankin: asked the Secretary of State for the Colonies, in view of the danger of fire from the disturbances in Angola, especially in the approaching dry season, what steps are being taken in the neighbouring territory of Northern Rhodesia to prevent the spread of fire into that territory.

Mr. Iain Macleod: The boundary between Angola and Northern Rhodesia is marked by a cleared strip which acts as a fire break. There are regular patrols during the dry season.

Mr. Rankin: Is the right hon. Gentleman aware that in these border areas fire bombs have been used by the Portuguese during the disturbances, despite the cleared strip? Does not the use of these fire bombs present a danger to foodstuffs, fuel, factories and so on across the border? If it does not cease, will the right hon. Gentleman make a protest to the Portuguese Government?

Mr. Macleod: I think that the fact that this boundary is marked by a cleared strip, which in itself is a firebreak, together with the additional precaution that during the dry season there are regular patrols, should take care of any anxiety which the hon. Gentleman has.

Oral Answers to Questions — EAST AFRICA

Finance

Viscount Hinchingbrooke: asked the Secretary of State for the Colonies what steps are being taken to authorise East African Governments to initiate policies of deficit financing at low interest rates and to establish centralised banking facilities and exchange equalisation funds on modern lines in order to promote a high level of business activity and employment at stable prices.

Mr. Iain Macleod: There has been careful study of the important matters raised by my noble Friend. For example, the I.B.R.D. mission to Tanganyika reported that it would be wiser not to take action to establish central banking facilities in East Africa until political developments in the area were clearer. It is doubtful whether, in present circumstances, deficit financing on a substantial scale could be practised without destroying confidence in the currency. The East African Currency Board is empowered to invest locally up to £20 million of its reserves, and, of course, Her Majesty's Government are giving substantial financial aid to these Governments to stimulate economic activity and employment.

Viscount Hinchingbrooke: I am grateful to my right hon. Friend for that reply, but can he confirm that in Kenya, for example, just at a time when the economy is somewhat placid, to say the the least, taxation is being increased, thus reducing the impact of the private sector on public financing? Is it not time that some high-powered Treasury officials were sent out to inquire into the possibility of reflationary activities, always guaranteeng a stable price level at the end of them?

Mr. Macleod: I am very conscious of the importance of these subjects. The head of my Finance Department in the Colonial Office has visited Kenya twice in very recent weeks and among other matters has discussed these very points. In reply to my noble Friend's suggestion for a high-level inquiry, perhaps I may send him the report of the I.B.R.D. mission to Tanganyika which, with certain reservations, will apply equally to Kenya and Uganda. I think that he will find an answer to most of the points he raises there.

Mr. G. M. Thomson: Can the Secretary of State persuade his noble Friend to apply his progressive Keynesian economics to this country as well as to Kenya?

Oral Answers to Questions — COLONIAL TERRITORIES

Medical Students

Mr. Boyden: asked the Secretary of State for the Colonies how many medical students are currently being trained in medical schools in British

Colonial Territories; and what was the total number of doctors qualifying in these schools in 1960.

Mr. H. Fraser: I am asking the overseas Governments concerned for the precise information requested and will write to the hon. Member when I have received their replies.
It is, however, estimated that over 700 medical students are receiving training; and nearly 100 doctors qualified last year.

Mr. Boyden: I thank the Minister for taking that trouble. How closely does his estimate correspond with the needs of the Colonial Territories, and what steps has he in mind for the immediate future to increase the number of medical students?

Mr. Fraser: That is a different question. When I have received the precise information, I shall be very happy to answer a further Question on the subject.

Oral Answers to Questions — TANGANYIKA

Portuguese Representation

Mr. G. M. Thomson: asked the Secretary of State for the Colonies what reply has been given to the request from the Government of Tanganyika that official Portuguese representation be now required to withdraw from that territory.

Mr. Iain Macleod: The formal request from the Tanganyika Government has only just been received, and no reply has yet been sent.

Mr. Thomson: Will the Secretary of State consider his reply to this request very carefully? We appreciate his difficulties in the matter, but will he use this very strong expression of view from one of the finest leaders of African nationalism and one of the best friends of this country to persuade his colleagues in the Government of the folly of policies at the United Nations and elsewhere which appear to condone repressive Portuguese colonial policies?

Mr. Macleod: That is a wider question. Mr. Nyerere will be in this country in a day or two. I shall, of course, be seeing him, and, no doubt, we shall discuss this and other matters. Normally, of course, the fact that one disagrees


with the policy of another Government is not—rightly so, in my view—regarded as a reason for breaking off diplomatic relations.

Oral Answers to Questions — ZANZIBAR

Riots (Commission of Inquiry)

Mr. F. Noel-Baker: asked the Secretary of State for the Colonies whether he will now make a further statement on the recent riots in Zanzibar, and the developments which have followed.

Mr. Iain Macleod: I deeply regret to inform the House that in the riots there were 66 deaths and that 320 persons were injured, of whom 91 were admitted to hospital. The total number of arrests so far is 1,205. It has been decided to set up a Commission to inquire into the causes of the disturbances; the terms of reference and membership will he announced in due course. Although some tension remains, the situation has been quiet since 8th June and the security forces are in control. At the request of the British Resident, my senior police adviser is flying to Zanzibar this week to advise on the reorganisation of the police force.

Mr. Noel-Baker: Is the Secretary of State able to tell us anything about recent political developments in Zanzibar and the rearrangement of the Government and the effect that these may have on security and on constitutional developments in Zanzibar during the next few months?

Mr. Macleod: On the immediate point, a Government has been formed from the combination of parties which secured most seats at the election. Obviously, at this stage one has no announcement of any kind to make about further constitutional conferences or advance for Zanzibar.

Mr. Wall: Has my right hon. Friend received any information from the official Opposition that they intend to boycott the Legislative Assembly?

Mr. Macleod: I am told that the present position is as my hon. Friend suggests, that the official Opposition do not intend to take part in events in the Legislative Assembly. If this is so, I

regret it very much, because they are a most formidable majority indeed, comprising support from the majority race in Zanzibar, and it would be a great pity if their voice were not heard in the councils of the islands.

Oral Answers to Questions — GIBRALTAR

Spanish Restrictions

Mr. Dodds: asked the Secretary of State for the Colonies what restrictions have been eased by Spain in its dealings with Gibraltar during the last few months, giving the date each took effect.

Mr. H. Fraser: The easing of frontier restrictions in June of last year for holders of United Kingdom and colonial passports was followed on 28th February this year by the Spanish authorities abolishing triptyques for foreign cars entering Spain. This concession has also been applied at the Gibraltar land frontier. Since then the Spanish customs authorities on the land frontier have also stopped recording the names of drivers. The net effect has been to reduce substantially the time spent in crossing the frontier at La Linea.

Mr. Dodds: But is the Under-Secretary really proud of this? Does he appreciate that there was a general relaxation on passports for the British Commonwealth and that statements by himself, the Prime Minister and the Lord Privy Seal are exasperating the people in Gibraltar? Why do the Government not tackle the real things that are harming Gibraltar so much? Is not the hon. Gentleman aware that the people of Spain, which is a Catholic country, will not allow their footballers to play in Gibraltar and yet a Spanish team is playing in a basket-ball competition in Russia and other countries? Is it not time that this unfriendly act against Gibraltar was looked upon as an unfriendly act against the British Commonwealth?

Mr. Fraser: I am sure that what my right hon. Friend the Lord Privy Seal said yesterday is correct and that the best chance of improving this thoroughly unsatisfactory situation at the moment is to improve our friendship with the Spanish Government.

Mr. Dudley Williams: Will the Under-Secretary bear in mind that while there


has been a relaxation on the entry of United Kingdom citizens into Gibraltar, similar relaxation has not taken place where nationals of other Commonwealth countries are concerned, and that they are restricted, in effect, to coming to Gibraltar through La Linea once in three months? Will my hon. Friend press our Ambassador in Madrid to make certain that this relaxation is applied generally to Commonwealth subjects?

Mr. Fraser: As the Lord Privy Seal said yesterday, both the Foreign Secretary and our Ambassador have raised this question with the Spanish Government.

Mr. Callaghan: May we not have an assurance from the hon. Gentleman that the future of Gibraltar will not be bartered for the friendship of Spain?

Hon. Members: Answer.

Mr. Callaghan: May we please have a proper answer?

Mr. Fraser: The answer to that supplementary question is that, of course, we stand absolutely firm on our position in Gibraltar.

Oral Answers to Questions — UGANDA

Buganda (Relationships Commission)

Mr. Sorensen: asked the Secretary of State for the Colonies what progress has been made in resolving difficulties in Uganda arising from resistance from the Kabaka and the Lukiko of Buganda to constitutional development.

Mr. Wall: asked the Secretary of State for the Colonies if he will make a statement about the findings of Lord Munster's Relationships Commission in Uganda.

Mr. Iain Macleod: The Governor has continued to discuss the position with the Kabaka. The findings of the Relation- ships Commission Report will be available when it is published in a few days. Its recommendations are to be considered at a constitutional conference to be convened in London in mid-September. I hope that the Report will provide a real opportunity for making progress on Buganda's relationships with the rest of Uganda.

Mr. Sorensen: While thanking the right hon. Gentleman for that reply, may I ask whether he could reply more speci-

fically to the first part of the Question where I asked what progress is being made? Can the right hon. Gentleman assure the House that progress has been made in this very difficult matter?

Mr. Macleod: I would prefer to put it the other way round and say that I am hopeful, now that we have the Munster Report, which I think is an excellent one, that we shall be able to make progress. We have lacked before a common basis of agreement for solving this big problem. I have always thought that the Munster Report would provide such a basis and, having read it, I think that it will.

Oral Answers to Questions — MAURITIUS

Communist Literature

Mr. Wall: asked the Secretary of State for the Colonies whether he will take powers to prevent the spreading of Communist literature in Mauritius, particularly in schools.

Mr. H. Fraser: The Governor in Council, under the Importation of Publications (Prohibition) Ordinance, 1953, already has power to prohibit the importation of any publication that is contrary to public interest.

Mr. Wall: Is my hon. Friend aware that I have in my hand two examples of the pamphlets which are said to be circulated in schools in Mauritius and that there is an attempt to flood the country with Communist propaganda and to step up the number of visits to countries behind the Iron Curtain? Will he look at the matter?

Mr. Fraser: Yes, Sir.

Mr. Paget: Does the hon. Gentleman feel that the banning of books is a very valuable method? Is it not far better to allow this propaganda to multiply, to let people read it and let its futility become apparent?

Mr. Fraser: That is a very open question.

Oral Answers to Questions — SCOTLAND

Legal Aid (Criminal Proceedings)

Mr. Steele: asked the Secretary of State for Scotland when he proposes to bring into operation the provisions of the


Legal Aid (Scotland) Act, 1949, so far as they relate to criminal proceedings.

The Secretary of State for Scotland (Mr. John Maclay): These provisions have been reviewed by a Committee, under the chairmanship of Lord Guthrie, which considered whether they should be varied in the light of experience of civil legal aid and any other relevant circum- stances. I am considering the Committee's Report but regret that I am not yet ready to make a statement.

Mr. Steele: Is the Secretary of State aware that this reply is very disappointing? Is he not aware that legal aid for criminal proceedings has been in operation in England and Wales since March, 1960, and that the Guthrie Report was published in May, 1960? Surely this has taken a long time. Does not the right hon. Gentleman think that Scotland deserves better than this?

Mr. Maclay: The English position is very different. I will write to the hon. Member to explain the detail, which is rather complicated.

Mr. Steele: asked the Secretary of State for Scotland if he will make further provision to recompense agents for poor people in criminal proceedings in view of the threatened breakdown of the present service.

Mr. Maclay: I am considering the whole question of legal aid in criminal proceedings, including the payments made to agents who appear in court, in the light of the Report of the Guthrie Committee.

Mr. Steele: But is not the Secretary of State aware that this was an interim payment which was arranged until such time as the payment under legal aid in criminal proceedings was arranged? Is he not aware that this present amount is totally inadequate, and could he not arrange for some extension of this payment until such time as he has made up his mind and brought in proper procedure for Scotland?

Mr. Maclay: I will certainly bear in mind what the hon. Member has said.

Industrial Development (Publicity)

Mr. W. Hamilton: asked the Secretary of State for Scotland to what extent his Department uses the facilities

afforded by the Central Office of Information to publicise the potentialities for industrial development in Scotland.

Mr. Maclay: My Department continues to utilise fully the Central Office of Information publicity services for this purpose.

Mr. Hamilton: Can the right hon. Gentleman say whether there has been any increase in expenditure in this field consequent upon the inauguration of the Common Market? Is he not aware that there are firms which normally would be expected to come to Scotland but which are increasingly turning their eyes to Common Market countries, and that increased publicity might do something, anyway, to reverse this trend?

Mr. Maclay: I could not give a categorical answer to the various points raised, but I would recall to the hon. Member an Answer which I gave him last year which explained fully the efforts made to circulate information from my office.

River Esk, Midlothian (Purification)

Mr. Willis: asked the Secretary of State for Scotland what further progress has been made in the purification of the River Esk, Midlothian.

Mr. Maclay: Nearly all the sewage works in the Esk Valley have now been modernised or connected to the regional sewer. Pollution of the river by industrial effluent is still serious, but the Lothians River Purification Board has secured the co-operation of the firms concerned and assures me that all are now actively engaged on improvement measures.

Mr. Willis: Is the right hon. Gentleman aware that I have been getting similar Answers for the last two or three years and that the river is still in as bad a condition as ever? It smells and it is dirty. Is it not time that something much more effective was done and that the people could see that it had been done?

Mr. Maclay: I am informed that real progress is being made in sewerage. Industrial effluent still causes trouble, but, as the hon. Member knows, this is no easy matter. There is real co-operation to try to achieve improvement.

Major Road Projects

Mr. Manuel: asked the Secretary of State for Scotland if he will state for each of the major road projects completed since 1st January, 1951, the length of roadway, the total cost of construction, and the cost of acquiring land.

Mr. Maclay: I will, with permission, circulate the information, which covers schemes costing over £100,000, in the OFFICIAL REPORT.

TRUNK ROADS


Agent Authority
Scheme
Mileage
Total Cost* (including cost of acquiring land)
Cost of* acquiring land
Date of† completion




£
£




Lanark C.C.
Improvement from Cardowan Road, Stepps to Mollinsburn, A.80:






(I) Cardowan Road, Stepps to West of Muirhead.
1·25
805,000
31,000
October, 1957


(II) East of Muirhead to County Boundary.
2·43
December, 1959


(III) Muirhead Diversion
0·85
May, 1961


Dunbarton C. C.
Widening from Dumbuck to South East of Barloan Crescent, Dumbarton, A. 82.
0·89
112,000
4,400
June, 1958


Stirling C.C
Bridge of Allan Diversion, A.9:






(I) Diversion and River Bridge
0·35
289,000
4,500
September, 1958


(II) Railway Bridge
December, 1960


Aberdeen T.C.
Widening of Bridge of Don, Aberdeen (Trunk Road portion), A.92.
—
137,700
40
May, 1959


Renfrew C.C.
Improvement at Langbank, A.8
0·38
134,000
250
June, 1959


Moray and Nairn C.C.
Sheriffmill Diversion including new bridge A.96.
0·52
129,000
—
September, 1959


Lanark C.C.
Improvement, including new bridge at Paddy's Rickle Bridge, A.74.
0·75
127,000
1,500
October, 1959


Stirling C.C.
Reconstruction of Linlithgow Bridge, including approaches, A.9.
—
164,000
5,150
November, 1959


Lanark C.C.
Birkwood Bridge, A.74
—
178,000
2,000
December, 1959


Roxburgh C.C
Improvement at Mossburnford, A.68.
1·53
113,000
1,000
December, 1959


Ayr C.C.
Improvement from Wigtown County Boundary northwards, A.77.
1·3
102,600
240
December, 1959


Berwick C.C.
Scrogend and Houndwood Diversions, A.1.
1·42
109,000
700
June, 1960


Inverness C.C.
Diversion between Glen Garry and Glenmoriston (contribution to North of Scotland Hydro-Electric Board's scheme), A.87.
8·25
311,000
—
February, 1961


Ayr C.C.
Ayr-Prestwick Bypass (Stage 1), A.78.
4·00
705,000
20,000
March, 1961


Lanark C.C.
Improvement from Newfield Inn to south of Millbank, A.74.
5·00
786,000
17,100
March, 1961


Dunbarton C.C.
Improvement from Luggie Water to west of Cumbernauld, A.80.
3·13
477,000
25,500
March, 1961


* Final costs given where available. Where not, the latest available estimates are used.


†Schemes have been listed as complete when they became fully open to public traffic. Small amounts of finishing work, e.g. on footpaths, may have taken place subsequently.

Mr. Manuel: Will the right hon. Gentleman indicate the percentage increase in expenditure since 1951, taking into consideration the fall in the value of the pound?

Mr. Maclay: That is another question. If the hon. Member puts it down, I will answer it.

Following is the information:

CLASSIFIED ROADS


Highway Authority
Scheme
Mileage
Total Cost* (including cost of acquiring land)
Grant
Cost of* acquiring land
Date of† completion


£
£
£


Inverness C.C.
Improvement of Glen Moriston Road, A.887.
11·5
203,900
203,900
490
November, 1951.


Lanark C.C.
Construction of Road No. 1, East Kilbride.
1·07
120,400
90,300
Nil
September, 1954.


Lanark C.C.
Construction of Road No. 2, East Kilbride.
1·9
118,700
89,000
290
June, 1956.


Sutherland C.C.
Improvement of Borgie-Naver Bridge Road, A.836.
5·75
173,600
173,600
130
June, 1956.


Inverness C.C.
Improvement of Broadford-Armadale Road, A.851.
5·0
120,700
120,700
20
February, 1957.


Argyll C.C.
Reconstruction of Cairndow-Toward Road between St. Catherine's and Strachur, A.815.
4·7
212,000
212,000
5,000
March, 1958.


Fife C.C.
Replacement of Leven Bridges, A.955.
0·5
185,100
138,800
2,080
February, 1958.


Sutherland C.C.
Reconstruction of Rhiconich-Gualin Road, A.838.
4·0
159,700
159,700
20
July, 1958.


Glasgow T.C
Widening of Paisley Road West, A.737.
0·85
106,000
79,000
5,000
September, 1958.


Lanark C.C.
Lanark-Hamilton Road, A.72. New bridge at Kirkfieldbank.
0·25
143,000
107,000
1,300
December, 1958.


Argyll C.C.
Reconstruction of Ford-Kilchrennan Road, Class III.
17·49
282,000
141,000
170
March, 1959.


Aberdeen T.C.
Widening of Bridge of Don (classified road portion), A.92.
0·1
148,300
111,300
20
March, 1959.


Perth C.C.
Gartmore Bridges, A.81
0·06
104,000
78,000
230
May, 1959.


Aberdeen T.C.
Improvement of Stonehaven Road, A.92.
0·9
125,000
93,000
5,700
December, 1959.


Perth T.C.
Replacement of Victoria Bridge, A.85.
0·13
160,000
120,000
50
July, 1960.


Inverness C.C.
North Ford Causeway (Ben-becula-North Uist), A.865.
5·0
624,000
468,000
500
August, 1960.


Argyll C.C.
Improvement of Achleek-Loch-aline Road, A.884.
3·35
155,000
155,000
800
September, 1960.


Fife C.C.
Diversion of A.911 at Glenrothes
1·25
140,000
105,000
3,560
April, 1961.


Fife C.C.
Lothrie Bridge, Leslie, A.911. New bridge and diversion.
0·26
111,000
83,000
450
May, 1961.


* Final costs are given where available. Where not, the latest available estimates are used.


† Schemes have been listed as complete when they became fully open to public traffic. Small amounts of finishing work, e.g. on footpaths, may have taken place subsequently.

Narrow Roads

Mr. Manuel: asked the Secretary of State for Scotland if he will take steps to debar vehicles from using narrow roads where the breadth of the vehicle, or its load, protrudes over the mid-road white line.

Mr. Maclay: No, Sir. I think that the matter is dealt with adequately by the Motor Vehicles (Construction and Use) Regulations which govern the width of vehicles and the loads they may carry; and by the powers available to

highway authorities under the Road Traffic Act to make traffic regulation orders.

Mr. Manuel: Is the Secretary of State aware of the great increase in propaganda to get tourists to the Highlands during the summer months? Is he aware that there is a great danger on a narrow road with blind corners when vehicles which use it protrude over the centre white line? A motorist who feels that he is travelling perfectly safely on his own side of the road is liable suddenly to be confronted with a vehicle that


cannot move over. The right hon. Gentleman already has Regulations governing the height and weight of the vehicles on these roads. Surely, he should take similar powers concerning width.

Mr. Maclay: I realise the danger which the hon. Member has pointed out, but the use of certain lengths of road of the kind he has in mind, in the North-West in particular, has by order been restricted to vehicles not exceeding 7 ft. 6 in. in width.

Tay Road Bridge

Mr. G. M. Thomson: asked the Secretary of State for Scotland whether, in view of the present high level of unemployment in the City of Dundee he will advance the starting date for building operations on the Tay Road Bridge.

Mr. Maclay: The starting date in 1963, which the local authorities concerned have agreed with me should be aimed at, has taken many factors into account, such as the time necessary for them to take powers to build the bridge; the time required to prepare the engineering plans; and the competing claims of other road projects on our funds. I doubt whether it would be practicable to advance it.

Mr. Thomson: Is the Secretary of State aware that that date was agreed as the latest possible date? Has his attention been drawn to the representations of the Lord Provost to the Parliamentary Secretary to the Ministry of Labour? Is the Secretary of State aware that I understand that the only reason why the bridge cannot be begun in the summer of next year is the Government's unwillingness to authorise it and to give the necessary financial approval?

Mr. Maclay: I am not prepared to add to my original reply. I have noted what the hon. Member has said, but I also hope that he will consider what I have said.

Heritable Subjects, Glasgow (Revaluation)

Mr. Rankin: asked the Secretary of State for Scotland what reply he has made to the request of Glasgow Corporation that revaluation of heritable

subjects should be delayed for one year, or alternatively that the date for disposing of appeals should be extended.

Mr. Maclay: I explained to the Corporation that postponement of the effective date of revaluation would require legislation and would present insuperable problems. I informed them at the same time that I was watching the position and that if it appeared, when more evidence was available, that there was a case for postponing the last date for disposal of appeals, I would do so.

Mr. Rankin: Is the right hon. Gentleman aware that the Minister of State, speaking on his behalf and dealing with the impact of derating and revaluation on shipbuilding, promised legislation to deal with that problem? Had the Minister of State any authority to do that, or was he merely deceiving the shipbuilders and the people of Scotland?

Mr. Maclay: The hon. Member has raised a whole lot of matters which do not arise out of his original Question.

Mr. Rankin: My Question deals with revaluation, and that is the topic to which the Minister of State addressed himself in Scotland last week on behalf of the Secretary of State, who now repudiates it.

Mr. Maclay: The hon. Member must address himself to his own Question and to my Answer to it.

Mr. Rankin: On a point of order. In what way, Mr. Speaker does my supplementary question not derive from the Question which appears on the Order Paper? Is it out of order?

Mr. Speaker: I did not so rule.

Mr. Rankin: May I therefore, Mr. Speaker, proceed to press the Secretary of State with my supplementary question—[HON. MEMBERS: "No."]—and ask him for an answer to it?

Mr. Speaker: No, I am afraid not. I have no power to compel Ministers to answer.

Mr. Rankin: Then I am right. The Secretary of State repudiates the Minister of State.

College of Commerce, Glasgow (Social Workers)

Mr. Hart: asked the Secretary of State for Scotland if he will make a statement on the new course for all-purpose social workers to be instituted at the Scottish College of Commerce in Glasgow.

Mr. Maclay: This full-time two-year course will start in October with an enrolment of about fifteen students. Further information about the course is given in my Health Department's Circular No. 30/61 issued on 22nd March, 1961, of which I am sending the hon. Lady a copy.

Mrs. Hart: Will the Secretary of State tell us how many staff have been recruited, what are their salary scales and how they compare with the scales for similar courses to be instituted in England and Wales? What consultation has there been with organisations of professional social workers in Scotland in the inauguration of this course?

Mr. Maclay: I should be very pleased if I were able to answer all those questions without warning. I will send the information to the hon. Lady.

Miss Herbison: Can the Secretary of State tell us why this college was chosen rather than a university, where there would have been a much better chance of these people getting the training that is considered so important?

Mr. Maclay: A study group, which was representative of the various interests concerned and was appointed to consider and advise upon the implementation in Scotland of the recommendations contained in the 1959 Young-husband Report on Social Workers, agreed that the college was the most appropriate Scottish centre for this type of training course.

Mrs. Hart: Since the content of the course will be dictated by the kind of staff who are recruited to administer it, why cannot the right hon. Gentleman, since he is giving a statement concerning the course, give details of the staff and their salaries?

Mr. Maclay: Because one answers the Question on the Order Paper to the best of one's ability. One cannot guess in advance all the supplementary questions that could possibly be put.

Disabled War Pensioners (Cars)

Mr. Willis: asked the Secretary of State for Scotland how many cars have now been distributed to disabled war pensioners in Scotland as a result of the extension of the scheme last year.

Mr. Maclay: Ninety-two.

Mr. Willis: In view of the progress that is being made with this scheme, will the Secretary of State consult the appropriate English Minister to make arrangements for its extension to industrial workers?

Mr. Maclay: The hon. Member will realise that this matter was fully debated on 30th June last. I have nothing to add to what was said on that occasion by the then Minister of Health.

Mr. T. Fraser: Is the Secretary of State not aware that 30th June is very near again and that there is strong feeling in Scotland that this scheme should be extended to the industrially disabled? I ask the right hon. Gentleman to have in mind particularly the paraplegic miner.

Mr. Maclay: I have noted carefully what has been said.

Personal Case

Miss Herbison: asked the Secretary of State for Scotland why a constituent of the hon. Member for Lanarkshire, North had to wait four months for the replacement of a surgical boot, details of which case have been sent to him by the hon. Member.

Mr. Maclay: I have explained to the hon. Lady in correspondence the reasons why a delay of this order is unfortunately unavoidable at present in non-urgent cases but that the hospital authorities are doing what they can to reduce waiting time.

Miss Herbison: Is the Secretary of State aware that the reply which he gave me by letter was not at all satisfactory? Can he tell the House what is considered urgent and not urgent in these matters? Is he aware that my constituent needed this surgical boot to enable him to carry out his work? Does not the right hon. Gentleman agree that to have to wait four months for a surgical boot is a disgrace?

Mr. Maclay: I have great sympathy with the hon. Lady's feelings about this matter and I have been following it up to see what improvements can be made.

Fat Cattle (Guaranteed Prices)

Mr. Hendry: asked the Secretary of State for Scotland whether the guaranteed price for fat cattle is calculated on a live-weight or dead-weight; what is the conversion factor applied in equating live-weight with dead-weight; and what is the average percentage of dead-weight to live-weight.

Mr. Maclay: Guarantee payments are determined on the basis of live-weight prices. The conversion factor is 1d. per lb. for every 5s. per cwt. of the live-weight guarantee payment. The average percentage of dead-weight to live-weight is estimated to be about 56 per cent.

Mr. Hendry: Since the conversion factor represents the killing-out percentage considerably less than the national average, can my right hon. Friend estimate the amount of public money which is being poured out unintentionally to those whose cattle are graded after slaughter, and what steps he is prepared to take to remedy this anomaly?

Mr. Maclay: I should inform my hon. Friend that this matter has never been raised formally by any of the representative bodies on the Joint Advisory Panel set up by Ministers to advise them on the working of the fatstock guarantee scheme. I have noted what my hon. Friend has said, but I cannot add to my reply.

Mr. Hendry: In view of the unsatisfactory situation revealed by the Answer, I propose to take an early opportunity of raising this matter on the Adjournment.

Oral Answers to Questions — COMMON MARKET

Mr. Stonehouse: asked the Prime Minister what representations he has received from the Prime Ministers of New Zealand and Australia regarding Great Britain's entry into the Common Market; and what reply he has sent.

The Prime Minister (Mr. Harold Macmillan): I would refer the hon. Member to the reply that I gave on 1st June to a Question by the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes).

Mr. Stonehouse: Is the Prime Minister aware that Great Britain's entry into the Common Market will have a profound effect on the Commonwealth and may well destroy it? What steps is he taking to consult the Commonwealth Prime Ministers about it?

The Prime Minister: I propose to make a statement after Questions as to the methods of consultation now proposed. But we have all along been in the closest touch with the Commonwealth Governments, and we have made it perfectly clear that if there is to be a closer association between Great Britain and the European Economic Community there must be satisfactory arrangements in respect of Commonwealth interests.

Mr. E. L. Mallalieu: Is the Prime Minister aware of the feeling, which, I think, is very widespread, among those who are most keen to maintain the Commonwealth links that we should not be pushed around by the Commonwealth? But we cannot expect the Commonwealth not to try to push us around so long as the Government are palpably unable to make up their mind and give a lead as to the direction in which we should go in this matter.

The Prime Minister: No, Sir. I regard consultation to mean consultation before a decision is taken and not afterwards.

Mr. Blyton: Is the Prime Minister aware that if he accepts the Treaty of Rome and supra-national authority, he will be chairman over the liquidation of the British Commonwealth?

The Prime Minister: No, Sir. I think that there is a great number of problems involved in this question. I repeat that I regard honest consultation, which is exactly what we have been doing and intend to intensify, to mean consultation while decisions are being considered and before they are taken.

Mr. Dugdale: Will the right hon. Gentleman consider publishing a White Paper setting forth exactly what changes in trade he expects will result so that not only the House but the Commonwealth may know how much loss there may be by Britain joining the Common Market?

The Prime Minister: I honestly do not think that a White Paper would add very


much, although I will do my best to see whether some further statements can be made. What we are now considering is, not whether we join the Common Market, but whether we enter into negotiations. Before entering into negotiations, I think that we should be fully informed of the opinions of the Commonwealth, be in the closest touch with the E.F.T.A. countries, which are our partners, and ensure full protection of our British agricultural interests.

Miss Lee: asked the Prime Minister if he will give an assurance that no approaches will be made to leaders of industry or any other interests outside Parliament with regard to Great Britain joining the Common Market before all the issues involved, economic and political, have been fully debated in the House of Commons.

The Prime Minister: No, Sir. The Government must reserve the right, on these difficult problems, to have such consultations as they may consider useful and necessary. In particular, there is, and will continue to be at all stages, close consultation with the other members of the Commonwealth and with our European Free Trade Association partners.

Miss Lee: Is the Prime Minister aware that statements have been made by leaders of agriculture and leaders of industry which give the impression that clear decisions have been reached to the effect that the House of Commons may be informed before the end of July that the Government have decided to enter the Common Market and that a mild public relations job will be done in the British House of Commons, but that business interests outside this House have had many more guarantees and far more detailed information than would seem to be indicated by the Prime Minister's reply?

The Prime Minister: If the hon. Lady believes that, I can only say—in the famous words of the Duke of Wellington—she can believe anything.

Miss Lee: Thirteen days ago, between 12.30 and one o'clock, there was on the radio a broadcast on farming by a responsible person, and definite dates were given of the stages in which we would go into the Common Market. May I take it from the right hon. Gentleman's

reply that that statement and similar statements were completely inaccurate and misinformed?

The Prime Minister: No, Sir. But the hon. Lady may take it that in this happy country the Government do not control broadcasting.

Mr. Woodburn: May I ask the right hon. Gentleman whether he can discover some information as to how much of British industry is now going inside the Common Market and how much this is likely to affect the industry of this country?

The Prime Minister: The Government have standing machinery for general consultation both with industry and with the trade unions. There have been from time to time discussions on this problem within the standing machinery, but no approaches have been made to industry about particular proposals. I think that it is proper that discussions of a general character should take place within this machinery of close association between trade unions and industrialists with the Government, which we have had for many years.

Mr. Gaitskell: While we all agree, I think, that British agriculture, the Commonwealth and our E.F.T.A. partners are the three really important points on which discussions have to take place, may I ask the right hon. Gentleman whether he will consider arranging for some of his colleagues to make much clearer and fuller statements than have so far been made showing more precisely what is at stake concerning agriculture and Commonwealth trade so that the House and the country generally can more easily make up their minds?

The Prime Minister: I think that that will come in due course. But I must re-emphasise that we are now considering, not whether we can conclude a negotiation, but whether we enter a negotiation. We are a little apt to assume—I find, with respect to it, that the Liberal Party assumes—that all we have to do is to come along and sign on the dotted line. That we are not going to do. What we have to decide is whether to enter into negotiation. In order to do that, all these considerations must be taken into account. We must


also consider, having regard to the derogation from the strict operation of the Treaty which would be necessary to us, whether there is any possibility of such a negotiation being successful. I think that the right hon. Gentleman has expressed agreement when I have said that I thought that an unsuccessful negotiation might injure the very purposes of European unity which many of us want to preserve.

Mr. Gaitskell: I do not think the right hon. Gentleman quite appreciated the point that I was trying to make. Is he aware that many Members of this House and, I am sure, many people in the country find it extremely hard to understand exactly what are the issues? For example, what are the commodities which are particularly important concerning both agriculture and the Commonwealth? What would be the precise effect if we went in under the present arrangements? What kind of changes would have to be made to make it possible for us to go in? Could not a Government statement in much greater detail than we have had so far be made on these subjects so that we might have a clearer idea of what is at stake?

The Prime Minister: We had quite a good debate yesterday on certain aspects of this matter. I think that the right hon. Gentleman has some experience of negotiation. This will be a very difficult negotiation. I have to consider whether to put every card on the table before entering.

Mr. Gaitskell: I agree that the negotiations are important, but the state of public opinion here is also important. A little more enlightenment from that point of view would be helpful.

The Prime Minister: Yes, but the two have to be balanced. Of course, it is very easy to take up positions which are bound to increase the disunity of Europe and to make statements which will lead to the almost certain failure of any negotiation. That I could do, but I am not prepared at this moment, before having honest consultation about the next stage of consultation with the Commonwealth, to go very much further than we have gone. However, I will consider what the right hon. Gentleman has said, always bearing in mind that, if we decide to enter into negotiations, the

only purpose of it will be to be in such a position that they are likely to be successful from our point of view.

Sir J. Duncan: Is not one of the difficulties in meeting the point of the Leader of the Opposition that Europe does not know what it wants concerning agriculture?

The Prime Minister: Of course, it is perfectly clear that the agricultural part of the Treaty is in a very formative stage. It has hardly begun to take shape.

Mr. Speaker: Mr. Henderson.

Mr. A. Henderson: Question No. 42.

The Prime Minister: rose—

Mr. Shinwell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise this matter on the Adjournment.

Mr. Speaker: Subject to correction, I think that it is not open to the right hon. Gentleman to do that. I think that this is the subject-matter of an Adjournment debate tomorrow night.

Mr. Ellis Smith: Mr. Speaker, may I respectfully give notice that, in accordance with Standing Order No. 9, I shall seek to move the Adjournment of the House to call attention to a matter—

Mr. Speaker: Order. When we get to the appropriate time, I will bear in mind what the hon. Member has in mind. At present I am concerned with securing an Answer to Question No. 42.

Mr. Ellis Smith: Prior to that, in accordance with Standing Order No. 9—

Mr. Speaker: No. With respect, it is not in accordance with order. At the right moment I will give the hon. Member an opportunity.

Oral Answers to Questions — CENTRAL EUROPE (JEWS)

Mr. A. Henderson: asked the Prime Minister whether he will direct the appropriate Ministers to prepare a White Paper containing all official records and information within the possession of Her Majesty's Government on the evacuation of Jews from Central Europe during the war years 1939 to 1945.

The Prime Minister: I sympathise with the purpose of the right hon. and learned Gentleman's Question. This is a complex matter and I have not yet had time to consider his proposal fully, but I will communicate with him as soon as I can.

Mr. Henderson: In view of the world-wide publicity which has been given to statements made at the Eichmann trial, will the Prime Minister place on record the fact that this country and Her Majesty's Government were not at any time indifferent to the tragic fate which overcame the Jews in Central Europe?

The Prime Minister: That is quite right. I am grateful to the right hon. and learned Gentleman for making that statement, which I confirm.

Mr. S. Silverman: Will the Prime Minister bear in mind that those of us who were Members of this House at the time will certainly endorse what my right hon. and learned Friend said about there being no indifference in this House at the time? At the same time, does the Prime Minister realise that there is a good deal of bewilderment and some anxiety about the whole of this tragic story, and that it might be a very good thing if Her Majesty's Government accepted my right hon. and learned Friend's suggestion so as to add to the historical material on which ultimately a judgment will have to be made?

The Prime Minister: As I have told the right hon. and learned Gentleman, this is a rather complicated matter, having regard to the rules about the publication of public documents, but I will consider this further with my advisers and inform him as soon as I can.

COMMON MARKET (COMMONWEALTH CONSULTATIONS)

The Prime Minister (Mr. Harold Macmillan): With permission, Mr. Speaker, I will now make a statement.
I have informed the House on a number of occasions that we have been in touch for some time in the normal way with other Commonwealth Governments about the problems of the relationship between the United Kingdom

and the European Economic Community and the possible arrangements which might meet the needs of ourselves and our partners in the Commonwealth as well as in the European Free Trade Association.
Her Majesty's Government have not yet reached decisions on this important question. Before doing so, we regard it as essential for there to be further discussions with all the Commonwealth countries. For this purpose I have proposed to the Prime Ministers of the Commonwealth countries that I should arrange for my right hon. Friend the Secretary of State for Commonwealth Relations and two other senior Ministers between them to visit Commonwealth capitals in the near future. In the light of these consultations and of the discussions which we shall be having with European Free Trade Association Ministers, Her Majesty's Government will further consider their policy.
So far, my proposal has been generally welcomed. Arangements for these visits are in hand and an announcement about the dates will be made as soon as possible. I hope that it will be possible for a start to be made towards the end of this month.

Mr. Gaitskell: While recognising the value of the proposed visits, may I ask the Prime Minister whether he does not think that there is a good deal to be said for Mr. Diefenbaker's proposal of a Commonwealth Prime Ministers' conference? Will he at least invite the views of other Commonwealth Prime Ministers on this conference, which might take place following the visits which the Prime Minister mentioned in his statement?

The Prime Minister: I have been in close touch with the Prime Minister of Canada throughout. There is no divergence between us. He is very happy that the visits should take place. He said, and I use his words, that
It might be necessary to have a collective discussion of Ministers"—
not Prime Ministers. That takes place very easily, as the right hon. Gentleman knows, at the time of the International Bank meeting between Finance Ministers. He said that it might be necessary at another stage to have a meeting of Prime Ministers if it can be arranged.
All that I do not exclude, but I still think it of great importance, having regard to the very divergent character of the problem as between, let us say, some of the West African members of the Commonwealth and some of the other members, that we should start with really careful and more detailed discussions than we have ever been able to have up to now and then decide at a later stage what should be the next method of consultation.

Mr. Gaitskell: Nevertheless, would not the Prime Minister agree that, whatever views may be reached as a result of these talks, it is desirable that before any decisions are taken there should be nothing less than a Prime Ministers' conference, since this obviously involves political as well as economic and financial issues?

The Prime Minister: It is because it involves political issues that I am so anxious that senior Ministers should go, able to discuss the political as well as the purely technical questions involved. I should not like to lay down now—I think that it would be foolish to do so—the precise procedure, but I do not exclude that.
The question is exactly what is meant by "before decisions are taken". There is first a decision to negotiate, and then, much later, a decision, as a result of negotiations, to see whether any satisfactory arrangements can be made.

Mr. Gaitskell: Arising out of that, may I ask another question? What is the relationship, so far as time is concerned, between the proposed visits and the further negotiations with members of the Common Market, which are also mentioned in the Prime Minister's statement?

The Prime Minister: The first thing is to get these Commonwealth discussions before any further discussions between ourselves and the members of the Six. All that procedure must be gone through, as well as the meeting which is to take place at the end of this month with the E.F.T.A. Ministers.
I emphasise, because I think that the right hon. Gentleman and I are in a great deal of agreement about how this matter should be handled, that what we are really discussing is not whether to agree to some arrangement immediately,

but whether to enter a negotiation. To decide that, it is important to decide what would be the necessary derogation from the precise working of the Rome Treaty as it stands from the Commonwealth point of view and from the British agricultural point of view on the economic side. Then there are even larger questions of the broad political future of the world—the free world—and how best this country can make its contribution.
All those questions must be discussed, and, therefore, I think that it would be far too crude to say that we must just sign it or not sign it. This is a great issue which we must handle carefully and effectively.

Mr. Gordon Walker: Will the Prime Minister answer a rather narrower and more concrete question? Does he think that this question of the attitude of the Commonwealth can be settled solely by bilateral conversations between us and each other member? As the whole future of the Commonwealth may be at stake, is it not essential that there should be a collective discussion between all the Prime Ministers before any serious steps are taken, even of negotiation?

The Prime Minister: I should like to consider that. I think that the most important things for negotiation are the economic aspects. I am bound to say that a collective meeting—which, in my experience, can never be got together, with all the work the Prime Ministers have, for more than three or four days—is not likely to be able to deal in great detail with economic problems. It is far better to do it in the way I propose. When it comes to the broader question, there I agree that a collective meeting may be valuable.

Sir Harmar Nicholls: Is my right hon. Friend aware that his answers to Questions and his statement today have been timely, and will revive a confidence that was beginning to wane? Members of the Conservative Party had feelings that were expressed by the hon. Member for Cannock (Miss Lee). There was a feeling abroad now seen obviously to be without foundation—that a decision had been taken and that it was now a matter of producing evidence to support that decision. The answers that my right hon. Friend has given today will, if pursued further, revive confidence.
Further to the point made by the right hon. Member the Leader of the Opposition, will my right hon. Friend bear in mind that the nation at home is alerted to the fact that a vital decision must be taken and that further details should be placed in front of it as soon as possible? If that is done, it will be of assistance not only to the nation, but to my right hon. Friend's Government.

The Prime Minister: I am grateful to my hon. Friend. I still think that we are apt to over-simplify the matter when we refer to a "vital decision". The decision does not rest entirely with us. The only decision now is whether or not to enter into negotiations which may or may not be successful.

Mr. Shinwell: Is the objection to an immediate Commonwealth Prime Ministers' conference coming from the Prime Ministers of the Commonwealth or from the right hon. Gentleman? Does not he appreciate that the circumstances are most exceptional, and that the whole future of the Commonwealth is at stake? Some of us will not allow the right hon. Member or anybody else to sell the Commonwealth down the river.

The Prime Minister: The right hon. Gentleman has been through so many moods in his life, and has displayed so many facets in public affairs, that I regard the last part of his supplementary question as one which I can altogether rebut—and I think that I have the right to do so, for my record is better than his.

Mr. Shinwell: The right hon. Gentleman cannot talk to me like that.

Hon. Members: Sit down.

Mr. Shinwell: I can take it and I can also dish it out.

Mr. Speaker: Order. There has been so much noise that it was not possible for hon. Members to hear me calling Mr. Turton.

Mr. Turton: As the Montreal Conference set up the Commonwealth Economic Consultative Council for purposes such as those which we are now discussing, will my right hon. Friend give an assurance that its machinery will be used before, during or after the projected visits?

The Prime Minister: We have been in constant touch through the official machinery. Then there is the possibility of using the machinery to which my right hon. Friend calls attention. All that has been considered. But we feel that these visits would be valuable now, because it is very difficult to call a meeting of all the Prime Ministers at short notice. I had the greatest difficulty in arranging the last one, even three or four months ahead. I think that these visits, which the Prime Minister of Canada greatly welcomed in his last communication to me, will be useful. We can then see how best to proceed.

Sir L. Ungoed-Thomas: As it has been said that a precondition to any negotiation is the acceptance of the political objectives of the Rome Treaty, which would mean closer political union with the Six than with the Commonwealth, does not the Prime Minister consider that he should immediately have a meeting of the Commonwealth Prime Ministers in order to consider whether or not to accept this political precondition before dealing with questions of detail about economics—or has the Prime Minister already made up his mind to accept that precondition?

The Prime Minister: The hon. and learned Member is over-simplifying the question. There are in the Rome Treaty certain questions of economic, trade and other arrangements. As the hon. and learned Gentleman well knows, there are divergent views in Europe as to how the ultimate solution may be arrived at. There is the federalist movement, and the confederalist movement. None of those questions is inherent in the Rome Treaty. There are those who think that there should be a broad federal institution. Others, such as the French Government, think that the confederalist way is the best way to proceed. We cannot over-simplify matters to the extent that the hon. and learned Member has attempted to do.

Mr. Biggs-Davison: Having regard to what Mr. Diefenbaker and other leading Commonwealth statesmen have said since my right hon. Friend last replied to me on this point, can we at least have an assurance that the Prime Minister will not close his mind to the possibility of a conference of Commonwealth Prime


Ministers and whatever other Ministers may be appropriate before the United Kingdom enters into negotiations?

The Prime Minister: That is another question. I do not exclude such a meeting, if it is thought desirable, but these meetings are difficult to arrange, as I have said. The first question is whether we should try out the ground and see whether negotiations on terms anything like what the Commonwealth, Britain and our E.F.T.A. partners think reasonable are possible. Having seen that—and it will take quite a long time—we can then proceed to see whether effective negotiations can be made on such a basis. I do not exclude any particular method. I welcome them all. But this is by far the most practical in the immediate situation.

Mr. A. Henderson: Is the Prime Minister aware that some hon. Members on this side of the House take the view that it is quite possible to maintain the Commonwealth as it is today and yet facilitate the entry of this country into the Common Market, if a decision is so taken?

The Prime Minister: I do not often take it upon myself to speak for the whole House. I know that there are different moods and different points of view in the House on most occasions, but this is not a party question. I think that both parties are broadly agreed that these are very grave issues for the future of our country and the world, and that we must try to think about them objectively to see if we can find a solution. We may fail, but that will be the aim.

Mr. Shinwell: The Prime Minister has already made up his mind.

The Prime Minister: The right hon. Member has become very patriotic in his old age. It is curious how jingoism grows upon people.
I think that the mood of the House as a whole is that this is a very serious and almost solemn question that we have to consider. All I am trying to do is to obtain the right machinery and to see that we consider the question among ourselves and with our partners in the Commonwealth, above all, together with our partners in Europe and in E.F.T.A.,

having regard to the interests of our agriculture and industry, and then to decide whether or not it is in our interests to see whether we can find a basis on which to have this unity with Europe.
We may decide otherwise, but we must decide. But we must surely seek out the ground very carefully before coming to a decision. I have no doubt that when we do come to a decision it will divide parties in the House. It will be one of the gravest decisions Britain has taken. We will try to do what is best for our country and for the free world.

Mr. Longden: Does my right hon. Friend recall that about three years ago there was a conference at Palmerston, in New Zealand, which was attended by the present Minister of Aviation, among others? Does he further recall that the suggestion was then made that a common approach should be made by the whole Commonwealth to the Six? As it must be in all our interests that some arrangement should be arrived at, can my right hon. Friend say why nothing has been done ever since, and why only now he is considering a discussion of the matter with Commonwealth Prime Ministers?

The Prime Minister: The concept then put forward was totally unrealistic, having regard to the economic interests of the various Commonwealth countries and of Europe.

Mr. Monslow: In the light of the present controversy, will not the Prime Minister agree to accept the request made by my right hon. Friend the Leader of the Opposition and let us have a White Paper setting out the economic facts, and also the likely political implications?

The Prime Minister: I should like to consider that suggestion. In fairness, perhaps the hon. Member would consider my problem. Let us suppose that we put into the White Paper everything that we tended to gain from one set of proposals and, also, what we stood to lose. Let us suppose that we set out all the figures, with all the advantages and disadvantages from our point of view. Does the hon. Member think that that would make it easier for us to enter effectively into negotiations, if we decided to do so?

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. It is impossible to debate this matter without a Question being before the House.

UNDERWATER DETECTION ESTABLISHMENT, PORTLAND (COMMITTEE'S REPORT)

The Prime Minister (Mr. Harold Macmillan): With permission, Mr. Speaker, I will make a statement on the Report of the Committee of Inquiry into Breaches of Security at the Underwater Detection Establishment at Portland.
The Government are greatly indebted to Sir Charles Romer and his colleagues for the speed and thoroughness with which they have investigated the circumstances of this case. Their Report is based on an exhaustive examination of a very considerable body of evidence and its conclusions are unanimous. In view of the special secrecy of some of the matters which the Committee had to investigate, I am satisfied that it would not be in the public interest to publish the full text of its Report. I am, however, arranging for a summary of its findings, which the Government accept, to be circulated in the OFFICIAL REPORT.
These findings fall broadly into three groups First, the Committee criticises, in general terms, certain defects in the Admiralty organisation for implementing security policy and procedures. Secondly, it criticises certain individuals at Portland for specific shortcomings in maintaining adequate security. Thirdly, it finds that no blame attaches to the immigration authorities and that the counter-espionage operations of the Security Service in this case were carried out with efficiency.
The first group of these findings is of special relevance to the current examination by the Radcliffe Committee of security procedures in the public service as a whole, and the Romer Report has, therefore, been referred to that Committee, which will, I am sure, take full account of it in its inquiry. Without prejudice to any recommendations which may be made by the Radcliffe Committee, the Board of Admiralty is taking steps, first, to review its internal organisation for implementing security policy in the light of the critcisms of the Romer Committee, and, secondly, to impress upon

all its staffs the need for strict compliance with security instructions.
The Admiralty is also considering what action should be taken as regards the individuals specifically blamed by the Romer Report.

Mr. Gaitskell: The House will, no doubt, wish to put further questions to the Prime Minister after hon. Members have had an opportunity of looking at the summary which is to be circulated. May I ask the Prime Minister whether, for the convenience of hon. Members, copies of the summary could be made available in the Library today, since, presumably, the Press will have the summary? I think that many hon. Members would wish to see it straight away.
Meanwhile, since it appears from what the Prime Minister has told us that the Report is severely critical of the Admiralty in this matter, may I ask him three questions?
First, is the Admiralty taking steps to tighten up the security arrangements, not only at the Underwater Detection Establishment at Portland, but also in all Admiralty establishments?
Secondly, was the Committee satisfied with the arrangements for liaison between the Admiralty and the security services, and, if not, what steps are being taken to put this right?
Thirdly, on the question of Ministerial responsibility, may I ask him which Minister is responsible for seeing that there is proper security in the Admiralty? Is it the First Lord of the Admiralty, or will the general question of Ministerial responsibility, and the possible reversion to the Prime Minister's office of the Security Service, be considered by the Radcliffe Committee?

The Prime Minister: I have arranged that copies of the summary should be placed in the Library now.
On the steps which the First Lord and the Board of Admiralty are taking, not only in connection with this particular naval establishment but in all naval establishments, which includes in that phrase Admiralty Headquarters itself, while waiting for any further proposals made by the Radcliffe Committee, to carry out the proposals and suggestions of the Romer Committee, that is being done.
I am studying the liaison between the Security Service and the Departments. I am bound to say that I think that it is better in some Departments than in others, although I still think that we do not want to have an independent Security Service—a Gestapo—for that has great dangers. I think that we must not push this to the other extreme and say that it has no rights and is called in only when the Department wants it. We have to get a balance between the extreme position of a police operating on its own and the absolute right of its not being able to operate until it is sent for by the Department. I think that is what the right hon. Gentleman means by liaison, and though it can be improved, it already works better in some Departments than others.
On the question of Ministerial responsibility, I still think that each Minister must be responsible for security in his own Department, unless it hands over the whole thing to an outside police force, which, I believe, would be contrary to our traditions and character. At the same time, on the question of responsibility, the actual responsibility at present rests on the Home Secretary, who is responsible for the security forces, their discipline, pay and organisation, but I retain a general responsibility for seeing that security is maintained. I think that from the Radcliffe Committee we may get a method of getting the advantages of better liaison without the disadvantages of making it subject to an outside independent police system.

Dame Irene Ward: May I ask my right hon. Friend whether the Romer Committee saw those security officers who had special knowledge and who volunteered to give information to the Committee? In other words, did the Committee get down to the people who had the knowledge and consider their knowledge?

The Prime Minister: Yes, Sir. Of course, a Committee of this character naturally took evidence from the Security Service and made every possible use of its evidence.

Mr. Lipton: Do we understand from the Prime Minister's statement that, where laxity of administration under the existing procedure has been established, certain civil servants in the establish-

ment are to be disciplined? If so, is the question of the disciplining of any particular person to be left entirely to the First Lord of the Admiralty? Will the First Lord be making a statement in due course as to which employees are to be disciplined and what punishments are being imposed?

The Prime Minister: I do not want to go into that further, except to say that the Admiralty is now considering it. I must point out that when hon. Members have read the summary, they can ask further questions. As to the three persons criticised, one officer retired three years ago, another officer is due to retire within a month, and the third was a very junior executive—I think that he is called an Executive Officer of the Civil Service. The Admiralty will take the proper proceedings. I think it right to say that.

Mr. Doughty: Do not the facts leading to this inquiry and the result of this inquiry show that on many occasions people inside the Service may be suspect, and if they are, necessarily, rightly or wrongly, inquiries have to be made into their conduct, and is it not quite wrong that the people doing that should be criticised for indulging in a witch hunt?

The Prime Minister: That is the difficult balance which we have to get. Hon. Members will read the summary. What I say broadly is that the general system of security and the rules, though they may be altered by the Radcliffe Committee's Report, are not altogether unsatisfactory, but they have not been applied, I think, as efficiently by the procedures adopted by the Admiralty.

Mr. Dugdale: Is the Prime Minister aware that two or three years ago there was considerable disquiet about the security arrangements in the Admiralty over the Commander Crabb affair? Is it made clear in that Report that there have been some improvements since then, or are these continuing troubles from that time until now?

The Prime Minister: I think that that matter is rather a different question. The Crabb affair was wholly different from this. This is really a question whether the security system as regards establishments—it spreads right out into the contractors—is sufficient, given the pressures


to which we are now subjected. I think that this report would be a great help to the Admiralty, and I know that the First Lord intends to implement the proposals. When we receive the Radcliffe Committee's Report, we shall have the advantage of all this evidence and then see whether some of the Radcliffe suggestions have to be adopted, and on that, I should like to suspend judgment. I have the greatest confidence in the members of the Radcliffe Committee. I think that it will give us a balanced Report, which will not go to the one extreme or the other.

Mr. G. Brown: Visiting responsibility, as I gather, on junior members of the establishment is hardly enough, is it? Would the Prime Minister say where Ministerial responsibility lies, and who is to accept responsibility for this, he himself or some other member of his Administration?

The Prime Minister: Perhaps the right hon. Member will wait until he has read the summary. I think that he will then see what the situation is. Certain improvements can be made and will be made. Responsibility lies, of course, with Ministers for everything that goes wrong—the First Lord and the collective Government as a whole. Of course, Ministers never get credit for things which go right, but they take responsibility for everything which goes wrong. I think that the approach we ought to make is to see how we can improve the situation without putting undue pressures on individuals.

Mr. Brown: That did not seem to deal with the question. The Prime Minister was at pains to tell us that somebody had resigned, somebody was about to resign, and somebody was very junior. I am asking him which Minister is to accept responsibility for a very considerable breakdown and what he proposes to do with that Minister?

The Prime Minister: The right hon. Member will perhaps read the summary and then put further questions. Of course Ministers are responsible. I am responsible, the First Lord is responsible and the Government as a whole are

responsible, but that is true of every action taken by any civil servant throughout the whole country.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: I think that we had better get on.

Following is the summary:

SUMMARY OF THE MAIN FINDINGS OF THE ROMER COMMITTEE

1. No criticism can be made of Houghton's appointment in 1951 as Clerk to the Naval Attaché in Warsaw. Nor can any criticism be made of want of action by the Naval Attaché or the Admiralty in the events leading up to his recall to London, before the expiration of his appointment, on account of his drinking habits.
2. Given the security criteria of the time, no legitimate criticism can be made of Houghton's subsequent appointment in 1952 to a post in the Underwater Detection Establishment at Portland which did not in itself involve access to secret material. It is regrettable, however, that the authorities at Portland were not informed about the reason for Houghton's recall from Warsaw.
3. No criticism can be made of Miss Gee's appointment to and subsequent retention at the Underwater Detection Establishment. At no time before the opening of the Security Service investigation in the middle of 1960 was there any ground for regarding Miss Gee with suspicion.
4. In 1954, an allegation was made to a junior official who was Houghton's immediate superior in the small section of the Underwater Detection Establishment in which Houghton worked that the latter was taking secret papers out of the Establishment. This official did not report the matter or take any other steps in regard to it apart from advising his informant to see the Security Officer or the police, and he is very much to blame for his inaction.
5. In 1956. Houghton was twice brought to the notice of the authorities in the Underwater Detection Establishment as a probable security risk. Insufficient investigations were made and a report which was both incomplete and misleading was submitted to the Admiralty. The Security Officer at the Establishment is gravely to blame for the casual way in which he dealt with this matter. Even so, the Captain of the Establishment should personally have ensured that proper inquiries were conducted and that the matter was fully reported to the Admiralty.
6. The main responsibility for the failure to make a proper investigation of Houghton in 1956 rests, therefore, with the authorities in the Underwater Detection Establishment at that time. The evidence discloses that there was a general want of "security mindedness" in the Establishment and responsibility for this must rest with the Captain of the Establishment. But the Admiralty, and the Security Service, although they received only an


incomplete and misleading report from Portland, cannot escape criticism for failing to press the matter to a positive conclusion.
7. With one minor exception the Committee found no inconsistency between Government security policy and the security rules issued by the Admiralty.
8. The Committee consider, however, that, apart altogether from the incidents in 1956, the Admiralty are to blame for the manner in which they discharged their responsibilities for security, particularly in regard to supervising security arrangements at Portland. In particular, the method of keeping the personal records of Admiralty civilian staff gave no certain means of ensuring that all the available information about the conduct and capabilities of individuals was to hand when they were considered for particular posts or when security doubts about them arose.
9. Lonsdale and the Krogers were in possession of genuine Commonwealth passports when they entered this country and no blame attaches to the immigration authorities, who had no grounds for supposing that these passports were fraudulently obtained and could not at that time have been warned by either the United States or the Canadian security authorities that either Lonsdale or the Krogers were spies.
10. There was subsequently no failure of liaison between the Security Service and the security authorities in the United States or any other country. Indeed, the circumstances in which Lonsdale and the Krogers were eventually detected and brought to justice are in themselves a convincing example of close and effective international security liaison.
11. The Committee do not believe that the Security Service or any agency acting on their behalf received or overlooked any possible "lead" which might have resulted in earlier identification of Lonsdale and the Krogers as spies while they were in this country: indeed, they consider that professional skill of a high order was shown in establishing the necessary evidence against them once such a "lead" had been received.

COMMON MARKET

Mr. Ellis Smith: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 to call attention to a definite matter of urgent public importance, namely,
the need for the House to consider, and, if necessary, to vote on, the urgent need to call a conference of Commonwealth Prime Ministers before we are committed to the Common Market in any form.
I know that I am not allowed to debate this matter now, but under the Standing Order a few observations may be made which may assist Mr. Speaker

in giving his decision. Those observations I make as briefly as possible, as follows.
First, the Commonwealth has been as loyal as it could possibly be to the mother country, Britain. Therefore, before we embark on any negotiations which could have very serious repercussions there should be a Commonwealth conference so that, collectively, the Commonwealth can come to a decision rather than leave the position as the Prime Minister proposed. I am strengthened in that view by the Prime Minister's statement today.
Secondly, during the two world wars in which some of us have been involved, we found that members of the Commonwealth were ultra-loyal to the mother country. Therefore, we ought now to be loyal to the whole of the Commonwealth. In my view, this House should consider the matter before the Government embark on the negotiations which the Prime Minister is proposing.
It is for those reasons, Mr. Speaker, that I ask your permission to move the Adjournment of the House.

Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House to call attention to a definite matter of urgent public importance, namely,
the need for the House to consider, and, if necessary, to vote on, the urgent need to call a conference of Commonwealth Prime Ministers before we are committed to the Common Market in any form.
I regret that I cannot accede to that application.

Mr. Ellis Smith: I accept the decision, Mr. Speaker. We should all determine our actions by our own consciences and, remembering what took place—

Mr. Speaker: I am obliged to the hon. Member for courteously accepting my decision, but the consequence of his doing so is that we must now get on with other business.

Mr. Stonehouse: On a point of order. Mr. Speaker. We have had an announcement this afternoon on questions affecting, Britain's policy towards the Common Market, but some of us are still at a loss to understand exactly what the Prime Minister has said.
Therefore, I wish to move the Adjournment of the House under Standing Order No. 9 to call attention to a definite matter of urgent public importance, namely,
the refusal of the Prime Minister to reveal to the House details of the pre-conditions under which the United Kingdom would join the Common Market, in view of the grave public concern regarding the taking of decisions affecting United Kingdom sovereignty and the future of the Commonwealth.
We were given to understand, in announcements made last night, that the Prime Minister would make a statement today about Great Britain's member- ship of the Common Market. In fact, the Prime Minister has absolutely refused to answer questions that have been put to him today in the House. In particular, he refused to answer—

Mr. Speaker: The hon. Member may postulate refusal of information for the purpose of making his application, but he must not make the kind of speech now which he would be making if the application were to succeed.

Mr. Stonehouse: I submit that this question is urgent because the Prime Minister refused to answer the most important question put to him by my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas), namely, whether the Government are accepting the political pre-conditions of membership of the European Economic Community. It is on that ground that I wish to submit to you that the House should be entitled to debate the question today.

Mr. Shinwell: Why has the Prime Minister run away?

Sir C. Osborne: He is not a spoilt child, like the right hon. Member for Easington (Mr. Shinwell).

Mr. Speaker: Order. Badinage very often represents selfishness in so far as it

interferes with the proceedings of the House.
The hon. Member for Wednesbury (Mr. Stonehouse) asks leave to move the Adjournment of the House under Standing Order No. 9 to call attention to a definite matter of urgent public importance, namely,
the refusal of the Prime Minister to reveal to the House details of the pre-conditions under which the United Kingdom would join the Common Market, in view of the grave public concern regarding the taking of decisions affecting United Kingdom sovereignty and the future of the Commonwealth.
I cannot, in accordance with precedent, accede to that application.

BALLOT FOR NOTICES OF MOTIONS

Common Market

Mr. S. Silverman: I beg to give notice that on Wednesday, 28th June, I shall call attention to the danger to this country of entering the Common Market, and move a Resolution.

Social and Cultural Contacts (Overseas Countries)

Mr. Robert Cooke: I beg to give notice that on Wednesday, 28th June, I shall call attention to the need for promoting social and cultural contacts with overseas countries, and move a Resolution.

Colonial and Commonwealth Students

Mr. van Straubenzee: I beg to give notice that on Wednesday, 28th June, I shall call attention to the facilities for Colonial and Commonwealth students in the United Kingdom, and move a Resolution.

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 8th June].

Clause 26.—(SURCHARGES ON EMPLOYERS.)

4.12 p.m.

Mr. Douglas Jay: I beg to move, in page 20, line 42, after "Kingdom" to insert:
and having regard to the need to maintain full employment in all parts of the United Kingdom".
I understand that it is permissible in this debate to refer also to the Amendment in page 20, line 40, after "Treasury" to insert:
after consultation with the Board of Trade and the Secretary of State for Scotland".
It touches similar issues.
We reach the Chancellor's proposals for a payroll tax. I imaigne that the Chancellor must sincerely regret by now that he ever introduced this idea of a payroll tax into the Budget because the opposition to it has been almost unanimous from all sections of opinion, and it is our intention to oppose the principle of the tax on the Question, That the Clause stand part of the Bill. At the moment, on these Amendments, we are concerned only with the foolishness of applying this payroll tax, on the assumption for the moment that there will be such a tax, in areas where there is considerable unemployment. We do not want the tax at all, but if it is to be applied the minimum condition of applying it should be that it should be applied only in areas of labour shortage where at least some sort of case might be made out for inducing or forcing employers to dismiss labour.
4.15 p.m.
I must, first, protest against the Government's action in so framing the Money Resolution that it is not even in order to put down Amendments for the exclusion of definite areas, such as Scotland, Wales or the development districts as listed in the Local Employment Act, from the operation of the tax. Surely the minimum the Government should have done is to allow the House of Commons and the Committee to propose and debate that areas of that kind should be

omitted from the effect of the tax. It is sharp practice so to draft a Money Resolution that that is ruled out of order in advance. But for this we should have sought to move that the development districts listed in the Local Employment Act and Northern Ireland—and by a queer trick of the Money Resolution and the drafting of the Bill it is permissible to move the omission of Northern Ireland—should be omitted from the tax.
It is no good the Chancellor trying to argue that the purpose of this payroll tax is not to induce employers to economise with labour and to discharge allegedly surplus labour but is simply a form of tax designed to mop up purchasing power. Since his Budget speech he and his supporting Ministers have been inclined to argue that he was misunderstood and that this payroll tax is not in the least intended to force dismissals of labour but is another regulator designed to reduce incomes and spending power in the hands of the public. But, as reported in column 808 of 17th April, the Chancellor said in his Budget speech, referring to the payroll tax:
The use of such a measure as an economic regulator would have the added advantage that when we are faced with a situation of chronic shortage of labour it would act as an incentive to economy in the use of manpower and to investment in labour-saving equipment."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 808.]
The Chancellor, therefore, cannot argue that that was not one of his intentions. Indeed, if it were not, and if the object of the regulator is simply to mop up purchasing power, why is it applied in this extraordinary fashion, which I suspect the Minister of Pensions, whom I see here, does not like very much—by addition to the insurance stamp? If the Chancellor is seeking to mop up purchasing power, why should he not have a regulator which enables him to increase Income Tax or Surtax or Profits Tax in the short-circuit manner in which he proposes to increase this tax? As he has said that this is one of his objectives, we must make that assumption for the purposes of debate.
If this is intended to induce employers to economise with manpower, then it seems to me to be incredible folly to propose to apply such a tax to areas such as Northern Ireland, Scotland, many parts of Wales and North-East England, for instance, where there is a surplus


and not a shortage of labour at present? It may be said that the Chancellor would not make such a suggestion, but if not he ought to be sympathetic to the Amendment and to our general case that the tax should not be applied in those areas. To suggest, to use his own words, that there is now "a situation of chronic shortage of labour" in Northern Ireland and most parts of Scotland, for example, is a complete travesty of the facts, as a number of hon. Members know very well. If this tax were applied with geographical discrimination, that is to say, applied to areas such as London and the Midlands, and some other areas where there might be a shortage of labour, he might make some case for it, but I put it to the Chancellor that it is a ridiculous economic policy to apply a tax designed to reduce employment to areas where there is too little employment already.
This tax is typical of much of the Government's muddled thinking on economic policy. Last winter it was alleged by many people, I do not know with how much truth, that the motor industry in Birmingham, Luton and Oxford was hanging on to manpower which apparently the Government thought it ought to discharge—and which, in the light of subsequent history, it may have been quite wise not to discharge. Because that was alleged, we now have this indiscriminate weapon which, as it stands and if it is to be used at all, will have to be applied without any discrimination to the whole of the United Kingdom.
I think that the Chancellor has been misled by the phrase "mobility of labour", which is thrown about very loosely by some people when they discuss this problem. This is a phrase which always seems to me to cause the utmost confusion. There is a great deal of mobility of labour in this country in the sense that people change their jobs without leaving the area in which they live. In that sense there is no lack of mobility of labour. As the Chancellor will find if he consults the figures of the Ministry of Labour, about 5 million people change their jobs in this country every year. In a town the size of Luton, with a population of 100,000, about 10,000 people change their jobs every year. It is completely false to suppose

that there is not a great deal of mobility of labour in that sense.
It follows from that that the way to get employment of surplus labour and the way to get people into the jobs the Government want them in is to steer industrial expansion and additional work to areas where the labour exists and where people are already moving. If this is done, there will be no lack of movement between jobs. The present mobility of labour—it exists, and can exist, only on a very small scale—consists of people moving from one area to another. We all know why this is so small. It is because moving home and finding somewhere to live imposes an almost impossible burden on anybody of small means who wishes to move his home and family from one area to another.
If the Chancellor of the Exchequer had seriously examined the problem and believed that there is surplus labour in some areas, as there is in Northern Ireland and Scotland, he would not have decided to impose a tax which will shake out people into unemployment everywhere. He would have tried to intensify the effort to restrain expansion of employment in areas where there is a shortage of labour and increase it in areas where there is a labour surplus. If the Chancellor had looked at the way the labour market works and the way labour moves, that is the conclusion at which he would have arrived. That reinforces the argument the Opposition are now advancing that, if we are to have this payroll tax, to which we are entirely opposed, the very minimum condition for its application is that it should be applied only to areas of labour shortage.
As the Chancellor has so framed the Bill—I suppose he takes responsibility for it—that it is not even possible for the Committee to table an Amendment to exclude specific areas, apart from the case of Northern Ireland, we are bound to press the point in the form of the Amendment now before us that at any rate the Government in making a decision should have regard to the needs of full employment. I do not see how the Government could do that in practice other than by deliberately excluding the areas of labour surplus and/or unemployment from the operation of the payroll tax. I hope that the


Chancellor, even if he does not accept the Amendment, will take my arguments seriously.

Lieut.-Colonel R. G. Grosvenor: The right hon. Member for Battersea, North (Mr. Jay) mentioned Northern Ireland several times. That is an area which has approximately 7½ per cent. unemployed. If the payroll tax were at any time implemented, it would affect us probably more than any other part of the United Kingdom. We were very grateful for the Chancellor of the Exchequer's statement on Second Reading that the Minister of Finance in Northern Ireland could do what he liked with the money, should it ever be collected. I understand from the statements which the Minister of Finance has made in the Stormont Parliament that in all probability this money, if ever collected, will be returned to those from whom it is taken. If that is so, it appears that we are concerned purely with points of administration. If they could be removed, it would he simpler to exclude Northern Ireland altogether. The points of administration are separate legislation, money paid into a separate fund, a different card, and a special stamp. This is purely administration, and I ask my right hon. and learned Friend to bear this in mind and exclude Northern Ireland altogether.

The Chairman: Mr. Willis.

Mr. Stanley R. McMaster: On a point of order. I am in some doubt. Are we now discussing the Amendment in the names of my hon. Friends and myself in page 21, which seeks to leave out lines 10 to 12, or is that to be discussed later?

The Chairman: The hon. and gallant Member for Fermanagh and South Tyrone (Lieut.-Colonel Grosvenor) trespassed on that Amendment. It may be for the convenience of the Committee to discuss the two Amendments together.

Mr. Jay: Further to that point of order. Subject to your Ruling, Sir Gordon, it will be more convenient to keep the two Amendments separate. On occasions it is impossible to avoid referring to Northern Ireland on this Amendment, but that area has a very special problem of its own.

The Chairman: It is a matter for the Committee to decide.

Mr. E. G. Willis: Probably none of the Budget proposals received such a bad reception in Scotland as this proposal. On the whole, the Budget had a not very welcome reception. That was demonstrated in no uncertain fashion by the result at Paisley a few days after the Budget. This proposal was condemned by practically every source in Scotland—including responsible industrial and local authority opinion. Practically everyone of note in Scotland questioned or condemned the proposal. They did so precisely because by no stretch of the imagination could they see how it would benefit Scotland. Instead of a payroll tax, we should be paying people to employ people in Scotland, not inflicting a penalty upon them if they provide employment.
For sixteen years Scotland has had double the rate of unemployment suffered by the rest of the country. We have been losing population at a fairly substantial rate. According to the Secretary of State, last year the net migration from Scotland was 27,000. According to the Registrar-General, it was more. Figures published in the Interim Census Report show that depopulation is going on throughout the whole of the North and in the Border areas in Scotland. In other words, Scotland is becoming depopulated to a very great extent, with the exception of the industrial belt across the lowlands.
The Chancellor of the Exchequer proposes that he should be allowed, if he thinks the economic situation calls for it, to levy a payroll tax. If this tax is used, it must be a blow to employment in Scotland. I do not know whether the right hon. and learned Gentleman intends to use it, because when the Prime Minister was in Scotland he spoke about it in terms which suggested that it never would be used. Perhaps he did so because he was in Scotland and because of the protests he had heard from his own party members at the Scottish Tory Party Conference. If it is not to be used, there does not seem to be much purpose in having it in the Bill. Even if the Prime Minister was trying to placate his own followers, it seems to suggest that there is a very good case for at least


excluding Scotland from the operation of the tax if it is used.
I could go from the North of Scotland to the South and pick out industry after industry. Instead of inflicting a payroll tax, industrialists operating in some of these areas should be given an inducement. We have been arguing for weeks in the Scottish Standing Committee along lines that have been put forward by eminent industrialists in Scotland who say that rather than put a tax of this sort on Scottish industries there should be special tax incentives for companies going to Scotland.
4.30 p.m.
How will industries be persuaded to go into the Highland areas if they are to be treated in this way? Someone trying to start a small industry in Ross and Cromarty or in Inverness-shire, employing thirty or forty people, will all the time have the threat of this payroll tax hanging over his head. Employers in the Highlands are already faced with great difficulties, such as increased freight charges. They are a long way from their markets and, on top of all that, they are now to be faced with the proposition that at any time they might have to pay a tax on the number of people they employ.
This to us in Scotland is sheer economic lunacy. There seems neither rhyme nor reason for the proposal. My remarks are not confined to the Highlands. One could go to the Border districts, where the same feelings about this tax are held. One could even go to the industrial areas, where no one would suggest that even in Lancashire—the centre of the industrial belt—that this tax is going to do any good.
The President of the Board of Trade and the Secretary of State for Scotland are fond of telling hon. Members that a certain number of jobs are in the pipeline. I think that 25,000 such jobs were recently said to be in view. But the trouble with the pipeline is that it is very leaky and we shall lose half of the jobs before the time arrives when they are supposed to start pouring out of the pipeline. [Laughter.] Hon. Gentlemen may laugh about this, but it is true. We are always getting these promises of jobs, but the outstanding fact from which no one can escape is that in Scotland we

have an unemployment rate which is double that for the rest of Great Britain. If it were not for the fact that 27,000 people leave the country each year we should have a fantastic rate of unemployment. It is only because men are leaving Scotland to seek employment in the Midlands, in London and overseas that we manage to keep down the unemployment figure to what it is today.
This tax will probably result in driving even more men out of Scotland at an even faster rate. Surely there is no possible test, on social or economic grounds, to suggest that the proposed tax is wise or that it could make things better in Scotland. I defy anyone to suggest one criterion by which it could be shown that the proposed tax will be beneficial to Scotland.
I am an ardent reader of the Scottish Press and of speeches that are made on this subject, but I have not yet heard one suggestion which convinces me that the proposal will benefit Scotland. The Chancellor's speech did not reassure me, especially since the right hon. Gentleman did not seem to have a very great reason for it. He wants something to play about with, to make his name as a Chancellor, but, as far as this proposal is concerned, he is backing the wrong horse in Scotland.
Even if the Clause is passed, it should, at least, be possible for the Chancellor, or whoever will administer the payroll tax, to exclude Scotland from its operation. That is the only possible way it will benefit Scotland—if it is levied against England but not against Scotland.
I plead with the Chancellor, therefore, to accept the Amendment. Failing that, we shall oppose this with all the vigour at our command, particularly Scottish hon. Members.

Mr. T. H. H. Skeet: I have listened with great care to a certain amount of fire and fury that has come from Scotland. Of course, hon. Members generally can appreciate their point of view, since they have an unemployment rate of about 5 per cent.—

Mr. Willis: Three point one per cent.

Mr. Skeet: Yes, that is so—and in the case of Northern Ireland it is even


higher. I believe that in March the Irish unemployment figure was 7 per cent. But I do not think that the Chancellor is at variance with these matters, because if one studies the National Insurance Act of 1946 one will see in Part I of Section 3:
Where is appears to the Treasury expedient so to do with a view to maintaining a stable level of employment, they may by order direct that contributions, instead of being paid at the rates set out in the First Schedule to this Act, shall…be paid art such higher or lower rates…as may be so specified or determined.
Certainly the Chancellor is taking certain powers under this Bill, a powerful second weapon, which he may or may not use. The whole point is that the Chancellor needs certain weapons of this character in order to preserve the security of employment and to maintain a stable level of employment.
I believe that the Chancellor has indicated—and my information is based on the various utterances of members of the Government Front Bench—that this is a temporary expedient to be used only if necessary. It will be imposed as a regulator, and only as such. In the coming years, if it is found to be a useful instrument, he may reshape the basis of the tax in order to overcome any anomalies.
Hon. Members should not get the impression that the United Kingdom is the only country with a payroll tax. There may be differences in what the tax is called, but it is a question of type 2 machinery of operation. In Britain, it has been attached to the National Insurance contributions, while in Western Germany and elsewhere it is a percentage of the monthly or quarterly payroll.
In Western Germany many of the employers must add about 40 per cent. over and above their wage bills—which is much higher than that proposed for Britain—and elsewhere the figure is even higher. Nevertheless, in Western Germany the rate of unemployment is well under 1 per cent.—even with this payroll tax. I believe that much the same argument could be applied to certain other countries of the E.E.C.

Mr. Willis: The hon. Gentleman is speaking about circumstances in an expanding economy. Apart from this year, no one would suggest that Scotland has had an expanding economy.

Mr. Skeet: I get the hon. Gentleman's point, but I would advise him that we are at present considering the possibility of associating with the E.E.C. on suitable terms. Is there any reason why Britain, including Scotland, should not have an expanding economy in the future?
Is it wrong for the Chancellor to take powers and to use them, as regulators, to remove distortions in full employment and to see that industry makes the best use of its available labour? One must study the impact of the proposed tax on industry and how, financially, it will affect it. It has been made clear that in the Civil Service the imposition on the Ministry of Housing and Local Government aspect will work out as about £16 million a year, Ministry of Health about £5 million a year, Ministry of Education about £1·2 million a year, agriculture about £7 million a year and the motor car industry about £4·5 million. Some of the leading industries, such as I.C.I. and A.E.I., will have to pay about £1 million apiece.
Are hon. Gentlemen opposite prepared to say that this is going to lead to further unemployment in Britain? Or might it not be said—in the South anyway—that this additional expenditure will be absorbed? The proposed tax will, after all, work out at only about 1 per cent. or 2 per cent. of the payroll, or, in terms of pay packets, about 1d. per hour per worker.
If there is a tendency on the part of some industries and firms to hold on to labour, the proposed tax would involve an extra imposition on such industries and on the amount of labour they carry. It is a matter of machinery. If it has to be in a permanent form, it may well have to be reshaped. We have the examples already in operation in Western Europe to enable us to find out how a payroll tax may be applied in various forms and be operated in a period of full employment.
I regard this as an important move by the Chancellor. I hope that he will recognise that reshaping may be necessary so as to take account of the need to have a tax compatible with conditions in Northern Ireland and Scotland.

Mr. Jay: If the hon. Gentleman thinks that it ought to be reshaped in the coming years to fit conditions in Scotland and


Northern Ireland, why not reshape it now, since those conditions already exist, in accordance with our Amendment?

Mr. Skeet: The Chancellor's purpose in introducing it at this stage is that it shall be a regulator which he may or may not use. He is not attempting this year to put it on a permanent footing. If he puts it on a permanent footing, it will be necessary, in my view, to reshape it to take account of these other factors. If he uses it this year he must bear in mind the provisions of the enactments, to which I have referred so as to take account of the need to maintain a stable level of employment within the United Kingdom, which includes Scotland and Northern Ireland.

Mr. Cledwyn Hughes: I have not the confidence in the Chancellor of the Exchequer which the hon. Member for Willesden, East (Mr. Skeet) has, and I do not wish to confer this dangerous power upon the right hon. and learned Gentleman. In my view, this is one of the most ill-conceived proposals which even this Government have produced. It has been received with varying degrees of hostility in various parts of the country, but it has shocked those areas which have suffered for years from chronic unemployment. What my hon. Friends have said about Scotland and what hon. Members have said about Northern Ireland is true of large areas of Wales. For many years, the position has remained fairly static in my constituency of Anglesey. For the last eight or ten years, unemployment has fluctuated between 8 and 10 per cent. of the insured population, the highest of any county in the United Kingdom. The consequences of this unemployment are well know to all hon. Members and I need not dwell upon them.
Recently, there has been an improvement. The efforts of local authorities and the inducements of the Local Employment Act are beginning to bear fruit. New industries are beginning to come in. The point which the Committee should bear in mind is that these industries are in the early stages of growth. Obviously, they are having and will have for some time teething troubles. It is not for me to tell the Government that it is not easy to induce new industry to come into these areas. We have been told that by Government spokesmen since 1951.
In Anglesey, we have five fairly new industries. They are doing well and are now on the threshhold of expansion. Things are beginning to look promising, but considerable problems remain. In its last report, the Anglesey Employment Committee said:
In the last twelve months, the Employment Exchanges and the Youth Employment Office in Anglesey have placed some 2,000 people in work, yet at no time were there more than 100 vacancies available in the county. These figures give a broad indication of the surplus of the supply of labour over demand in Anglesey.
That will give the Chancellor some idea of the problems with which we still have to contend.
Many of the industrialists who are building new industries in Anglesey and elsewhere have been greatly upset by the Chancellor's proposal. Quite naturally, their confidence has been shaken. On the one hand, we are told by the Government that they are doing everything they possibly can to induce industrialists to go into areas with high unemployment, while, on the other hand, the industries which are there are threatened with arbitrary taxation at the very moment when they are trying to establish themselves and build up. Many of these industries have not yet started to make a profit. Obviously, a new industry must expect to run for some time at a loss. They can go through a very trying time unless they have vast resources. In my opinion, this tax would have the effect of neutralising all the efforts which have been made.
The Chancellor says that he would use the tax only in times of economic crisis. It is precisely at times of economic difficulty that industries on the periphery need bolstering and encouraging. Shortly after the Chancellor's Budget statement, I received a letter from an industrialist in North-West Wales. He was extremely disturbed by what he had read. He said to me, "If this tax is imposed, I shall have no alternative but to close my three plants in Caernarvonshire and Anglesey" Although his industries do not employ a large number of people they make a vital contribution in the life of the area.
I want the Chancellor to say now whether it is his intention to apply this tax in areas such as Anglesey and the other unemployment areas in the United Kingdom. If he says that such is not


his intention, that will reassure industry in these areas. On the other hand, if he does not give such a categorical assurance, he will shake the confidence of everyone concerned and nullify all the work which has been done by local authorities and others to deal with the twin evils of unemployment and depopulation. As it stands, the present proposal is monstrous, and I hope that even now the Government may decide to withdraw it. I warmly support the Amendment.

4.45 p.m.

Mr. John Hall: Rather regretfully, I must oppose these Amendments, not because I am in favour of the payroll tax provided for in Clause 26—I think it is a very bad tax and I should like to see the Clause removed—but because I think that the Amendments are likely to be rather more unfortunate and unfair in their effect than, perhaps, hon. Members supporting them intend.
I do not believe that the proposal to impose a payroll tax is really designed to reduce over-employment and to save labour. Any company employing a marginal additional amount of labour which is prepared to pay quite a considerable weekly sum at times when it does not require it will not be deterred by an extra 4s. per employee per week, a total of £13 a year. After being set against Income Tax and the increased Profits Tax, the figure will be about £6 17s. per employee per year.

Mr. Jay: If that argument, with which we are very familiar, be valid, why did the Chancellor say in his Budget speech that the tax would act as an incentive to economy in the use of manpower?

Mr. Hall: I am giving my own personal opinion. In my view, it will not have the effect which the Chancellor said it would have, and, moreover, I cannot think that it could ever have been intended primarily to have the effect of reducing over-employment.
If the Amendments were adopted, however, they could have a very unfortunate effect upon those industries in which we are particularly interested today, that is to say, industries working in the export market. Many of our major exporting industries are in areas

of high unemployment. They would not benefit from any concession of the kind suggested in the Amendment because it is designed to help areas of high unemployment.
My constituency, for example, is an area of very high employment. I think that there is under 1 per cent. unemployment. The number of vacancies far exceeds the number on the unemployment register. Several of our industries, for example, furniture, have been trying very hard for some years to export with no little success. But furniture is not an easy thing to export. Developing new markets is a costly business, and the percentage of profit that is made initially is very small. One makes very little in the first few years. An industry of that kind will not be helped in any way by a proposal such as that contained in the Amendment, but it will still be penalised by the imposition of a payroll tax of the kind suggested by my right hon. and learned Friend.
My hon. Friend the Member for Willesden, East (Mr. Skeet), in his interesting contribution, pointed out that the percentage of tax likely to be imposed was a very small percentage of the weekly or annual wage cost. But as a percentage of the profit of a company it can be very high. Let me give the example of a medium-sized company employing about 650 employees. I was looking into the accounts of such a company the other day. Suppose that it has been trying hard for a number of years, with some success, to develop an export market but is only now beginning to make profits as a result of its efforts. Suppose that its profits are about £50,000 a year. I calculate that this tax would impose a further cost of £6,700 on that company. After allowing for the offset of the additional 2½ per cent. Profits Tax, it works out that there is a further tax of 12½ per cent. on its profits. That seems to be a very penal form of tax to impose.
My hon. Friend mentioned that a payroll tax is in existence in Western Germany. He said that it has had no retarding effect on the economy of that country and that, on the contrary, it is going through a period of considerable industrial expansion. It is true that there is a quite high payroll tax in Western Germany, but industry


there does not bear some of the taxes which industry in this country has to bear.

Mr. Skeet: My hon. Friend will appreciate that the employer in Western Germany has a very much higher welfare burden to bear than his counterpart in the United Kingdom. There an employer pays over 40 per cent whereas the United Kingdom employer pays about 13 per cent. or slightly more.

Mr. Hall: I do not deny that the welfare tax paid by the German industrialist is very high. I was thinking of the total taxation burden on firms and individuals in this country.
I wish to be brief because I have a good deal more to say on the Question "That the Clause stand part of the Bill". I conclude by saying that, although I sympathise with the idea behind these Amendments, I could not accept an Amendment designed to give special concessions to certain areas leaving many industries which are vital to our economic life penalised. I would much prefer to see the tax as a whole removed.

Mr. J. P. W. Mallalieu: I have some reservations about the general principle of this tax. It may be that I shall have a chance of expressing those reservations on the Question "That the Clause stand part of the Bill." However, I wholeheartedly support the Amendment.
The hon. Member for Wycombe (Mr. John Hall) feels that the Amendment will not have much effect on employment and that a tax of £13 per man per year will not induce firms to lay off men. On the other hand, he says that it will have a serious effect on profits and that it will reduce profits to a discouraging level. I do not think that those two horses can run together.

Mr. John Hall: The hon. Gentleman must remember that the amount of labour which may be surplus to requirements is, generally speaking, fairly marginal as a percentage of the total labour force. The amount likely to be saved by laying off men is not very great, but the total cost of the payroll tax spread over the entire labour force can be very considerable.

Mr. Mallalieu: Yes, it can. The cost on the labour force could be significant in special areas, such as Scotland and Wales, because firms which go to those areas start at a serious disadvantage. They are a long way from their markets and suppliers and costs are higher to them than they are in areas of full employment because of increased transport and so on. Something in addition to this may seriously discourage not only people who are there but others who might contemplate going there.
For the past sixteen years I have listened to a series of debates about the problems of the special areas. I have studied the various Bills which successive Governments have introduced to try to repair the damage which our economic system has done to the special areas. This afternoon I have heard speeches similiar to those which I first heard in this Committee in 1945. In spite of all that has been done in the special areas, representatives from Northern Ireland, Scotland and Wales are still saying, 16 years later, "We are in trouble. We still have a high level of unemployment".
The application of this tax, which, in principle, is a very good one, will make it more difficult still for the old story of the special areas to be made more happy. I very much hope that the Chancellor will put a bit of flexibility into the Clause in order to allow adjustments and regulators to work, not indiscriminately, but properly.

Mr. James Scott-Hopkins: Like the right hon. Member for Battersea, North (Mr. Jay) and my hon. Friend the Member for Torrington (Mr. P. Browne), I found myself in difficulty in trying to draft an Amendment which would exclude areas of high unemployment. Indeed, it is impossible to draft one, as the right hon. Gentleman said, having regard to the Money Resolution. It is difficult to find an argument which will support the Chancellor of the Exchequer's wish to apply this payroll tax universally throughout the country. It is very easy to exaggerate the effect which this tax could have if applied on industry in general.
My hon. Friend the Member for Wycombe (Mr. John Hall) put forward some cogent arguments, many of which I agree with, as to the effect that this tax will have. It will be a marginal


effect in many cases. I disagree fundamentally with the main argument which my hon. Friend put forward in rejecting the Clause, namely, that, because the export industry could not be included in the Amendment, it was therefore a bad Amendment and therefore areas of high unemployment, like those in the West Country, should not be included either. The hon. Member for Huddersfield, East (Mr. J. P. W. Mallalieu) said that we had areas of high unemployment 16 years ago and that we have them now. There are other areas, such as the West Country, which could be included in his "round Britain tour".
But because we cannot help the exporting industries, surely that is no reason why something should not be done to help areas of high unemployment. As I have said, it is very easy to exaggerate the danger of this tax. I am prepared to accept what my right hon. and learned Friend said in his Budget speech, namely, that the imposition of this tax is necessary for his purposes. I am prepared to accept, if and when my right hon. Friend decides that it is necessary to use the regulator, that he should do so. Indeed, I have not the expert knowledge to disagree on that. All I would say is that, as the Finance Bill has been drafted, it is quite impossible to exclude areas of high unemployment.
5.0 p.m.
Will my right hon. and learned Friend look again at the matter to see if there is not some method whereby these areas can be given help if they need help? When I first read the last paragraph of subsection (2) of the Clause, it seemed to me that perhaps that paragraph could be used to help areas of high unemployment which had been designated under the Local Employment Act. But, on closer examination of that paragraph, it obviously cannot be used, as it applies only to persons and not to areas.
I ask my right hon. and learned Friend, between now and Report, to study whether some method cannot be found whereby industries which are struggling—indeed there are some in my own area and others elsewhere in England and Wales—can be helped particularly and specially if and when he should ever decide to impose this

tax. I trust that he will not have to impose it, but, if he does, will he try to find some method whereby exceptions can be made?
On the overall question, I am quite prepared to accept the fact that my right hon. and learned Friend needs this regulator at his disposal so as to regulate the economy if and when that time should come. However, I hope that he will look at the point which I am making.

Mr. William Small: On this question of the payroll tax, I have consulted many representatives of the shipbuilding industry in my constituency and the item of cost is the one which they all take into consideration. Redundancy is taking place in the industry and the shipbuilders tell me that contraction in their labour force means that they have to keep a balanced labour force in order to compete for the building of a ship. When they compete they have to say that they have the requisite labour force available. In general, the imposition of a payroll tax is something which they all reject.
How will such a tax work in practice? In 1954 I discovered the arguments about the economic use of manpower. A big firm, namely, Imperial Chemical Industries, brought out a production of employment code on working conditions. In effect, if a payroll tax is imposed it will not make for the mobility of labour. The first thing that will happen is that the retiring age will be reduced from 65 to 62. Then firms will look at the married women which they employ and will discharge as many of them as they possibly can because, as far as manufacturers are concerned, they will represent an equal cost.
There must be stable costs in the market. If there are not, the extra cost is passed on to the consumer. In practice, the worker will tend to believe that the boss will pay the tax, but the employer's reaction to the tax will be that it is an extra cost on his production and so he will make arrangements to remove certain labour. Therefore, in practice, instead of making labour mobile, such a tax will mean that a man will retire at the age of 62, married women will be declared redundant and firms will refuse to take on apprentices. Therefore, such


a tax will become a restrictive imposition on the distribution of the facilities at an employer's disposal.

Mr. Raymond Gower: Like others who have spoken so far in the debate, I appreciate the motives of those who have put down this Amendment, but if my right hon. and learned Friend decides to accept it I shall not be at all happy. I do not know what my right hon. and learned Friend intends to do, but, as I say, if he accepts the Amendment I shall not be at all happy.
The purpose of this regulator which has been mentioned by some of my hon. Friends is obviously an inter-budgetary measure to meet a particular difficulty which may arise between two Budgets and when the danger would appear to my right hon. and learned Friend to be of such a nature that he cannot wait to deal with it until the next Budget.
In some respects, it seems to me that the sponsors of the Amendment will be defeating the object which they have in mind if they persuade my right hon. and learned Friend to insert the Amendment in the Bill, and for this reason. To be effective the regulator must apply at its maximum all over the country. Obviously, my right hon. and learned Friend has devised the regulator to meet a maladjustment—in the words of the Bill—in the balance between demand and resources. It is pretty obvious to everyone that if demand and resources are out of balance it is those areas to which reference has been made which are certain to suffer most. In other words, if the maladjustment of the economy proceeds further and is not remedied by my right hon. and learned Friend's regulator the position will deteriorate most in the very areas to which reference has been made by those participating in the debate.
For that reason, I suggest to the right hon. Member for Battersea, North (Mr. Jay) and to those who supported the Amendment that they will be defeating the object which they have in mind if the Amendment is inserted in the Bill. The objective which they should have is the early removal of any maladjustment in the economy or the slowing down of any deterioration which has taken place.
There is a second point upon which I wish to comment. It seems to me that

those who are supporting the Amendment are trying to build into the Bill what might be termed a second line of defence for areas of high unemployment.

Mr. E. G. Willis: Why not?

Mr. Gower: The hon. Gentleman asks "Why not?" For that purpose there are the special measures already embodied in such legislation as the Local Employment Act and the refusal of development certificates in certain parts of the country, such as London and the Midlands.
I can understand the motives which inspire those who try to build in additional safeguards but I should have thought it far more desirable that we should know the nature of this special assistance which we are giving to those areas, assistance which has had such magnificent results. [HON. MEMBERS: "Where?"] In the part of the country which I represent—South Wales. The assistance has had magnificent results in South Wales. It has turned the area from a development area into a prosperous area and, potentially, into one of the biggest boom areas in the British Isles. It may be that to effect the same results in Scotland and Northern Ireland we should have to contemplate the strengthening of the Local Employment Act. But let us do it in that way. This regulator is not intended for that purpose. It is intended to cure a sudden maladjustment in our economy which will work to the prejudice of the whole country, prosperous or not prosperous.

Miss Margaret Herbison: I am grateful to the hon. Gentleman for giving way. He is telling a very wonderful success story. Does he ascribe this great boom in South Wales to only one year's working of the Local Employment Act?

Mr. Gower: I ascribe it to the Local Employment Act and to other legislation which preceded it, and to the confidence which the Welsh people have in the country in which they live and which, apparently, is lacking in some other parts of the country.

Mr. Willis: I have been following the hon. Gentleman's speech with great care. He says that we are trying to protect


Scotland and other areas against conditions which this Amendment endeavours to remedy. But surely what we are really trying to do is to protect areas from the overall effects of blanket legislation which damages our economy enormously and from which we take longer to recover than do other areas.

Mr. Gower: My reply is that the maladjustment referred to in the Bill will work infinitely greater havoc in those areas than the mere imposition of a tax of this nature.
We cannot easily stop at the point suggested by hon. Members who support the Amendment. One might argue just as easily, why not have differential Purchase Tax rates in different parts of the country because the rates might result in more damage in Ulster than in England and Scotland? Why not have different rates of National Assistance and unemployment benefit in Ulster and in Scotland or England, because in some places they are needed more than in others? One could apply that argument to different forms of taxation and in respect of all forms of Excise and revenue. I suggest that it is the wrong approach to a matter of this kind.
If it be necessary we could strengthen special benefits and the sanctions in the Local Employment Act, and have stronger sanctions against the development of industry in prosperous parts of the country. But I suggest that when framing a Measure to deal with a financial crisis it is not desirable to adopt this backdoor method of supplementing the provisions in the Local Employment Act? I hope that hon. Members will not interpret my remarks as a wish to see these particular areas suffer, or that nothing should be done to help them. I believe that they need every possible help, but let it be given by legislation designed for the purpose.

Mr. George Lawson: The hon. Member for Barry (Mr. Gower) appears very happy about developments in his own area. I remember that recently he boasted to me about those developments. It would seem that what has been provided in that part of the country is similar to what we are asking for elsewhere, namely, a measure of discrimination. It is for that we are asking in the Amendments.
A characteristic of the Clause is that it is non-discriminatory. It is designed to treat all kinds of industries, workers and employers on the same flat-rate basis. It appears to me that unless a considerable measure of discrimination is injected into the Clause it will not serve the purposes which I think that the Chancellor has in mind. I am prepared to agree that the right hon. and learned Gentleman wishes to bring into being a regulator which would enable the Government, by its operation, to lessen an excessive demand for labour; to prise out workers from those firms and industries where there are too many workers and transport labour to where it may be better used. It is designed to liberate the workers; to enable them to go where their skill may be more effectively used in the interests of the national economy.
The very fact that this is a flat-rate, non-discriminatory general regulator will defeat that purpose. My hon. Friend the Member for Glasgow, Scotstoun (Mr. Small) asked about the practicalities of the idea. As he said, when any employer finds himself having to carry the payroll tax, he will look round to see what kind of labour he is able to dispense with. I submit to the Chancellor that those workers whom employer A could dispense with most advantageously are not necessarily the workers who could be profitably employed by employer B. It may well be the other way round. Those whom employer A would wish to dispense with are the same as those whom employer B would get rid of were he in the same position.
5.15 p.m.
To my mind, the term "special area" does not mean only an area of relatively high unemployment. It includes areas where there may be an excessively high demand for labour. That is the case, for example, in the Midlands. My hon. Friends and I have asked Questions designed to bring out the relative demand for labour or, as we put it, job opportunity, in the Midlands as compared with Scotland. Both areas are the same in size.
The Answers to those Questions revealed a startling difference in the job opportunity or demand for labour. There is a scarcity of labour in the Midlands and an abundance of labour in Scotland. Out of every 100 boys


wholly unemployed in Scotland there might, for example, be 30, 40 or 50 unfilled vacancies. On one occasion there were 23 unfilled vacancies in the Midlands for every boy who signed the unemployment register. At the same time, in Scotland there were two or three boys for every vacancy. The contrast is so great. The position with which the right hon. and learnd Gentleman is seeking to deal is more or less permanent, in the sense that there are excessive demands in some parts of the country, and in certain industries and skills, and a considerable lack of demand in other parts.
What is likely to happen if the right hon. and learned Gentleman does not apply his regulator in a discriminatory fashion is that in areas of high labour demand employers who have the labour will hold on to their workers. In areas like the Midlands, such a regulator would not prise out the workers. If employers have found it difficult to obtain workers, they will be all the more likely to want to keep them. In that sense the regulator would work the wrong way round and would lead to a tighter rather than a looser grip on the workers.
This must apply more especially in the case of the scarcer types of labour, the skilled workers. In any area where there is a great demand we know that there is a great scarcity of skilled workers. So it must mean that the discrimination will operate in that direction, in the sense that those workers will be retained and others dispensed with. In terms of skill if the purpose is to release labour it must mean that the purpose is to get skilled people especially out of jobs where their skill is not being utilised to the full.
I should like to see some kind of payroll tax which would operate heavily in some areas, where it would make certain skills expensive, and less heavily in other areas where the same skills would be less expensive. This would have to apply to special industries. My hon. Friend the Member for Scotstoun referred to the shipbuilding industry. It might be argued by such people who write for papers like the Economist that if an industry cannot pay its way, it is time that it went out. But we must

appreciate that we shall need the shipbuilding industry for a long time to come. Our shipbuilding industry finds difficulty in competing with the industries of other countries and it is not for us to make those difficulties greater.
Just as this payroll tax, operated on a flat-rate basis, favours skilled workers and certain districts, so it does in respect of certain trades or industries. It is discriminatory to industries like the automobile industry which can afford to pay substantially higher for some skills. Such industries as the automobile industry and the shipbuilding industry are competing for the same kind of skills.
Often, the automobile industry draws away skill from shipbuilding and uses it at a much lower level of operative ability than would be the case in shipbuilding. Unless the discrimination for which we ask is applied, or unless there is even much finer discrimination than is proposed, an industry like shipbuilding would in these circumstances find itself even more readily and rapidly drained of the skills that are essential for it.
When there was a reference to unemployment in Scotland, the hon. Member for Ayr (Sir T. Moore), who is no longer in his place, said, in a rather offhand fashion, that is was only 3·1 per cent. The suggestion in his voice was that it was very little. The important factor, however, is not the absolute total of unemployment, but the relative position. It would be fantastic if we in Scotland had the kind of unemployment that we had in the interwar years. What we have in Scotland is a great lack of job opportunity as compared with other parts of the country. We resent this, because it is quite unnecessary.
There is not a night when I go to Motherwell station on my way to London—I travel every Sunday night—when there are not some young fellows on the platform who are coming down here "on spec." When I ask where they are going, they reply that they are coming down here to see if they can get a job. When I ask whether they have a job to go to, they reply that they have not, but that they are coming down "on spec" to stay with a sister or brother, who has told them that there are good opportunities. That sort of thing goes on day after day
Figures have just been issued showing that in the past ten years we have had a net loss by migration of over a quarter of a million people. That is not to say that only a quarter of a million have emigrated. It is the net loss bearing in mind that we have a higher birthrate than is characteristic of England and Wales, although not, perhaps, as high as is characteristic of Northern Ireland. Nevertheless, our population growth remains practically static.
This is where we make our special plea. We must have deliberate Government action to rectify the wrong balance that has grown up in our economy. A great centre of population like Birmingham or London draws more and more people to it nagnetwise. The bigger it becomes, the more powerful the draw. The further one is away from the centre, the less job opportunity there is in the more peripheral areas. There is always this draw to the centre. As a result, more and more of our population moves into this quite small pant of the country.
We must have Government action to rectify that type of development. If the Chancellor's measures are to work effectively, they must be discriminatory. We ask him at least to accept our Amendments.

Mr. A. E. Cooper: The great trouble with the Amendment is that it selects one part of the country and, presumably, certain industries for special treatment. The difficulty is that a powerful argument can be founded for the exemption of practically every section of our industrial and civic life.
If one accepts the principle of the payroll tax, which I do not, presumably its omnibus effect must be accepted. [HON. MEMBERS: "Why?"] Because the arguments put forward by my hon. Friend the Member for Barry (Mr. Gower) show that if we want to give special consideration for assistance to particular industries there are other and better ways of giving that help than by discriminating in the way proposed in the Amendment.
For example, if we are to be discriminatory in this way, let us consider the effects of the tax on local authorities. The money for the tax will come only out of increased rates. I do not have

the figure that it will cost in a full year, but it is obviously a substantial figure.

Mr. John Hall: It will cost the local authorities in England and Wales an additional £16 million in a full year.

Mr. Cooper: Secondly, what about the excess cost to the hospital service and the Civil Service, which are paid for by the taxpayer, or to the nationalised industries? The overall cost of this tax to the railways in a full year would be approximately £6 million. The Coal Board will be saddled with a similar cost. Where will they get this extra money? It will come only from higher charges or, if there is a substantial deficit in those two nationalised undertakings, by further subventions from the taxpayer through the Budget. The whole principle behind the Clause is a typical piece of Treasury nonsense, which cannot possibly be supported on any economic grounds.
The Amendment relates to lines 40 and 42 in page 20, part of which states
that it is expedient so to do with a view to regulating the balance between demand and resources in the United Kingdom.
One of the Amendments uses the words:
and having regard to the need to maintain full employment in all parts of the United Kingdom.
It seems to me that within those two broad statements, we could discuss the full effects of the payroll tax.
The hon. Member for Motherwell (Mr. Lawson) talked about what he called this small measure. If fully implemented, it will be £200 million a year. I was tempted to ask the hon. Member just how small is small. This is a substantial sum of money, and we are entitled to ask whether it will have the effect that the Chancellor hopes. By its very nature, it cannot possibly be immediate in effect. At the most it will bring in approximately £4 million a week once it is implemented. I cannot believe that we could have a financial crisis whch could be so marginally adjusted from bad to good by the simple transfer of £4 million in any one week.
Since the war, the Treasury has learned nothing whatever. Year after year, it has been proved beyond doubt that increases in taxation are highly inflationary. We must have regard to the ultimate effect when we consider


what the Chancellor is seeking to do by the Clause. Will it maintain the balance between demand and resources? Will it have the effect of maintaining full employment? We have already seen that certain small imposts have had an inflationary effect, and the effect of the payroll tax inevitably must be inflationary.
It must increase production costs. It must put up distribution costs and it must lessen our ability to compete in the export markets. The Clause must be considered against the overall picture and not from the narrow viewpoint of the £4 million a week. I regard the whole principle as ill-conceived, ill-thought-out, highly dangerous and ineffective in its intent, and for these reasons I regret that I shall not be able to support my right hon. and learned Friend in the Lobby.

5.30 p.m.

Mr. William Hamilton: Whatever the fate of the Amendments, if every hon. Member opposite who has spoken votes in accordance with what he has said there can be no doubt about the fate of the Clause as a whole. Enthusiasm for the Clause inside and outside the House of Commons has been less than tepid. I do not view with any great enthusiasm any Amendment which seeks to consult the Secretary of State for Scotland, but we must make the best of a bad job and we have to put down Amendments simply to present the very special point of view of the Scottish economy both from the trade union and the manufacturers' side.
My hon. Friend the Member for Edinburgh, East (Mr. Willis) was absolutely right. The payroll tax has been universally condemned by both sides of industry in Scotland. Indeed, there was no excessive enthusiasm for it even on the part of the Prime Minister when he spoke at the Unionist Conference in Ayr on 24th April, shortly after the Budget was Produced. He said, according to The Times:
This tax would be used only to stop a boom going too far.
He was speaking in Scotland, and talking about a boom going too high.

Mr. William Ross: The Prime Minister was talking about his own voice.

Mr. Hamilton: The reason why we oppose this proposal in Scotland is precisely that we never enjoy a boom as understood in the South-East, in London and in the Midlands.
I want to ask the Chancellor a pertinent question about this problem. When and how does the right hon. and learned Gentleman assess whether or not there is a boom? What yardstick does he take? I suppose that one of the most important measures by which one assesses whether there is inflation in the economy is the total unemployment figure related to unfilled vacancies. I have the Ministry of Labour figures for May. These figures show quite clearly evidence that there is an element of inflation. The Treasury knows and admits that. Presumably, it is one of the reasons why the Treasury wants these regulators.
The May figures show that in Great Britain the number of unemployed was 299,272 and the number of unfilled vacancies 353,519. In other words, there were many more unfilled vacancies than there were unemployed, but if we compare the Scottish figure with the overall figure for Great Britain we find a very different picture. My hon. Friend the Member for Motherwell (Mr. Lawson) has said that Scotland and the Midlands are strictly comparable regions. Let us therefore compare the figures for Scotland and for the Midlands and for London and the South-East.
The total unemployed in Scotland in May numbered 64,884, or 3 per cent. The Midland figure was 20,786, a percentage rate of ·9 of 1 per cent. The figure for London and the south-east area was 48,021 unemployed, again a percentage rate of ·9 of 1 per cent., but the vacancies unfilled in Scotland for nearly 65,000 unemployed are 18,560 and the unfilled vacancies in the Midland area for 21,000 in round figures are 35,465. For London and the south-east area, for 48,000 unemployed the unfilled vacancies are 102,000.
In other words, for every seven unemployed in Scotland there are only two unfilled vacancies, whereas in the Midland region there are almost two jobs for every one person out of a job and in London there are more than two jobs for every one out of work. The same kind of pattern is seen in the figures for youths. I will not weary the Committee with


many more figures, but they are important. The number of boys under 18 unemployed in the Midlands is 342. In Scotland the number is 1,685. Unemployed girls in the Midlands number 242 and in Scotland 1,056.
These quite clearly are examples of the great difference in the economic atmosphere and situation in Scotland compared with the Midlands and London and the more prosperous South. When we were debating earlier the other regulator, the Economic Secretary said that, of course, selective steps could be taken to help Scotland. We have the Local Employment Act. The Government take these steps and there are countless jobs in this wonderful magic pipeline that we hear so much about. But since the Local Employment Act became effective, whilst it may be true that the overall figure of unemployment in Scotland has come down, the gap between the percentage rate in Scotland and the percentage rate in the more prosperous area in the South has increased. Therefore, whatever might be said in favour of the Local Employment Act, it is simply not solving the problem in Scotland vis-à-vis the rest of the United Kingdom.
All we ask for in this narrow Amendment is that the Chancellor should turn his mind towards an attempt to get a more selective approach to this problem. It seems to us that special problems demand special, selective controls. When we come to the Question, "That the Clause stand part of the Bill" we shall have a great deal more to say on the subject, because, as my right hon. Friend the Member for Battersea, North (Mr. Jay) has said, we are opposed to the Clause and I think that the majority of hon. Members are opposed to it. Certainly the majority of people in the country on the employers' and employees' sides are opposed to it. If democracy is to mean anything, that can only mean that the Chancellor ought to take the Clause out of the Bill altogether.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I intervene at this stage with not the least idea of curtailing the debate, though I think that there will be an opportunity again, on the Question "That the Clause stand part of the Bill", for further discussion. I acknowledge that this proposal in my Budget has not

precisely received unqualified approval either inside or outside the House of Commons. Its primary purpose was as a regulator and I emphasise that again. Its primary purpose was to give me an additional means of restricting the economy, and a means which would be fairly widespread in its impact. I maintain that success in that, if it is necessary, is of direct interest to all parts of the country.
The hon. Member for Fife, West (Mr. Hamilton) asked for a definition of the term "a boom going too far". He said that Scotland had never had a boom, but if there is an excessive boom in England that is bad for Scotland, too. It is bad for the economy as a whole. [HON. MEMBERS: "Why?"] Because if there is an excessive pressure of demand on resources in certain industrial areas, costs go up there, our competitive capacity in those industries is affected, and that affects the economy as a whole. We want all industry throughout the country to remain competitive. Overpressure of demand on resources in one area has a bad effect on the economy of the whole.
As I made clear in my Budget speech, this regulator will have the additional advantage of encouraging economy in the use of manpower.

Mr. John Rankin: Mr. John Rankin (Glasgow, Govan) rose—

Mr. Lloyd: I have listened to many speeches, and I hope that the hon. Gentleman will allow me to make mine.
There is nothing new in the idea of varying these contributions. As my hon. Friend the Member for Willesden, East (Mr. Skeet) mentioned, there was a provision to that effect in the National Insurance Act, 1946, and I think that the criticism has been very much exaggerated about the effect of this 4s. a week. The Scottish Trades Union Council passed a resolution on 18th April saying:
This tax, if indiscriminately applied, will drive employers in Scotland to cut their personnel to the barest minimum. Dismissals in those industries facing difficulties will be widespread.
Will that really be the effect of an increase of 4s. a week in the employers' contribution?

Mr. Rankin: It is happening every week now.

Mr. Lloyd: If that is the effect of an increase of 4s. a week per person on the employers' wage bill, I think that note should be taken of that in accordance both with the putting forward of wage demands and the yielding of wage demands. If 4s. a week per person will make all the difference to the success or failure of industry in Scotland, it brings a new light to bear on the appeals for restraint in putting forward wage claims.

Mr. Rankin: I hope that the right hon. and learned Gentleman appreciates the situation in which he is imposing this payroll tax. Three weeks ago I was told by a shipyard employer in Govan that men were being paid off every week. On top of present difficulties, they will have to face this pressure of the payroll tax.

Mr. Lloyd: It is not a payroll tax. I am asking for this only as an additional weapon. I come now to that part of my argument.
I know that there are disadvantages in this proposal. I am in considerable sympathy with a lot of what has been said by hon. Members on both sides about its disadvantages. But there are disadvantages in every proposal. If one talks about dealing with the Bank Rate, or hire-purchase restrictions, or restricting credit from the special deposits scheme, or about the surcharge regulator, everybody says that there are disadvantages to doing that. There are disadvantages in any attempt to restrict the growth of the economy or to restrict demand and equate it to resources. Whatever one does, somebody will be hurt. That cannot be avoided.

Mr. William Baxter: Is this to be a financial regulator, or a manpower regulator? If it is to be a financial regulator, I can appreciate the right hon. and learned Gentleman's attitude, but if it is to be a manpower regulator, it is not necessary in areas of high unemployment, such as are found in Scotland.

Mr. Lloyd: I was about to deal with that point. All regulators have their disadvantages. I have already admitted that I think that this one has disadvantages, that it applies to all parts of Scotland, England and Wales necessarily and that it cannot, by the nature of it, differentiate between areas and industries. I face the difficulty of that. I have said that it has disadvantages.
When considering, if one does, a more permanent payroll tax, one wants to think carefully about how to deal with the thoughtful remarks of the hon. Member for Motherwell (Mr. Lawson), when he suggested the way in which one might have to try to deal with skilled labour. There is a great deal of scope for thought on the part of us all about the idea of a permanent payroll tax, whether it is practical to differentiate between skills, between areas, and between industries.
I have never suggested that this should be a permanent measure. I have asked for this power this year to strengthen my hand in dealing with a situation, which may develop, of excessive demand; when the need, in the interests of the economy, is to curtail purchasing power. In my Budget speech I spoke of the need for more regulators to stimulate or restrict the economy, and I said that this one would have the additional advantage of being an incentive to economy in the use of labour.
5.45 p.m.
The primary purpose of this proposal is to curtail purchasing power, if the need is to do that. My hon. Friend the Member for Ilford, South (Mr. Cooper) says that it is only £4 million a week; it is such a small amount that it will not achieve its purpose. If it is such a small amount for one argument, why is it such a great disadvantage from another point of view? This cuts both ways. I am not suggesting that the imposition of this tax, should it be necessary, will solve all the problems. If it were used, it might have to be used with other measures, but the primary purpose is to regulate the economy by means of an additional weapon in my hand, and I thought that it was common ground between both sides of the Committee, in an earlier debate, that there was a need for the Government of the day to have added powers to deal with a difficult situation.
The Amendment is unnecessary because both sides of the Committee are in agreement about the policy of full employment. It was stated specifically in the last Economic Survey:
It is Government policy to encourage this growth. The commitment to maintain full employment is an important contribution to this aim.

Mr. Jay: Why not accept the Amendment?

Mr. Lloyd: One does not put in every Act of Parliament every statement of Government policy. It is not necessary to write everything into each Clause.

Mr. Jay: Would not the Chancellor agree that this is the point on which there is great anxiety, as is obvious from the debate today, and that that is a special reason for putting it in the Bill?

Mr. Lloyd: I do not accept that. I have quoted the Economic Survey. I have stated categorically that it is the policy of the Government, and I do not think it necessary to write it into the Bill. I do not think that there is any difference between the two sides of the Committee about the desirability of this, and I take note of the points made by my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) and other hon. Members.
If one were to use a regulator of this sort, one would need to have regard at the time to the possible impact on areas where employment was not as high as in other areas. Obviously, one is not ruled out from taking action of that sort, and in coming to a decision whether to use this kind of regulator one would have very much in mind the possible effect on areas of comparatively high unemployment.

Dr. J. Dickson Mabon: Before the right hon. and learned Gentleman neutralises the Amendment by saying that it is already covered in the White Paper, issued just before the Budget, may I ask him whether it is not true that the difference is in the three words "in all parts" of the United Kingdom? This is the nub of the argument. The White Paper does not say "in all parts". It refers simply to the policy of full employment in the United Kingdom, for which the Chancellor can take credit, but that is not what the Amendment seeks to do. Surely that is the point he ought to answer before he pretends that the Amendment says nothing.

Mr. Lloyd: I do not suggest that it says nothing. I think that this declaration of policy about full employment is very important and significant. I am not certain whether we can have full employment in every part of the United Kingdom at the same time. I

do not think that that is possible, but if one is introducing a measure which one thinks will benefit the economy as a whole, at the time of doing that one would have special regard to areas which might be particularly hurt.

Mr. G. R. Mitchison: Is not one point of the Amendment that the Order, when made, has to be approved by Parliament? If the Treasury has to have regard not only to the balance between demand and resources, but to the question of full employment in all parts of the country, that second matter will be one which can and should be raised and discussed on the Motion to approve the Order.

Mr. Lloyd: I would not have thought that it would be out of order in such a debate. I should have thought that it would be a very relevant and important consideration. But I do not think it necessary to write into an Act of Parliament a statement of policy to which we are already committed. I take the point of the hon. Member for Greenock (Dr. Dickson Mabon) about "in all parts" of the United Kingdom, but I doubt whether he thinks that we can have absolutely full employment in all parts of the country at the same time. There is bound to be a certain degree of fluctuation, with employment in some industries rising and in others declining.
The other Amendment concerns consultations with the President of the Board of Trade and the Secretary of State for Scotland. This question will have to be decided by the Government as a whole, which means that the views of the President of the Board of Trade and the Secretary of State for Scotland will be taken into account. It is quite unnecessary to put it into the Bill.
The question of Northern Ireland has been referred to in more speeches than one—particularly by my hon. and gallant Friend the Member for Fermanagh and South Tyrone (Lieut.-Col. Grosvenor). There is separate legislation, a separate fund, a different card and a specially overprinted stamp in respect of Northern Ireland, and, in any case, I have already stated that I will hand the money received back to the Northern Ireland Government. That is


a different case, and the question is purely one of administrative convenience.
During the Second Reading debate I said that the money would be handed back to the Government of Northern Ireland. I had a conversation only yesterday with the Finance Minister of the Northern Ireland Government, who told me that it is the intention of his Government to refund the money to those who have paid it. That being so, we have to consider the question of administrative convenience.

Mr. Frederick Lee: On a point of order. Is it not the case that the Chair has ruled that the Amendment relating to Northern Ireland is to be called, and that we shall be able to have a discussion on this issue when we debate that Amendment?

The Deputy-Chairman (Major Sir William Anstruther-Gray): That is so. My predecessor in the Chair did so rule, and it would be better if that Ruling were adhered to.

Mr. Lloyd: Yes, Sir William. I was merely referring to matters of administrative convenience. I know that we shall have an opportunity later of discussing the situation in Northern Ireland.
I have no doubt that we shall discuss further points when we debate the Question, "That the Clause stand part of the Bill", but the basic reason for our asking for this power is to strengthen the hand of the Government in dealing with a situation which might be adverse to the country. I ask the Committee to reject the Amendment.

Mr. Lee: The right hon. and learned Gentleman said that he was not intervening at this point in order to close the debate. I venture to suggest that his intervention has probably lengthened it by a few hours. Hon, Members on this side of the Committee were hopeful that, after the near unanimity which we had reached on the proposition that a payroll tax will not be helpful in our present economic and industrial situation, the right hon. and learned Gentleman would have reconsidered the question, if not because of the arguments put forward by hon. Members on this

side of the Committee then at any rate because of those put forward by hon. Members opposite, who have gone even further than my hon. Friends in that they have said that they were utterly and completely opposed to the whole Clause. The hon. Member for Wycombe (Mr. John Hall) and the hon. Member for Ilford, South (Mr. Cooper) both said that, and I share their view.
The Chancellor told us that his suggestions have not received unqualified approval. We could almost say that they have received unqualified disapproval, both from employers and employees in industry. The Minister is very unlucky in that, having had the courage to relax reliance on the monetary policy which for ten years has been the only one the Government have had, he now finds that one of the regulators which he proposes to use in this connection is as unpopular as was the monetary policy itself. He has said that a permanent payroll tax may have to be considered. That itself is an admission that the Government must go much further in industrial planning. They are now drifting into an absurd position because they have never taken seriously the necessity for industrial planning.
Some of my hon. Friends have mentioned the drift to the South. This is a fantastic situation. Both in the areas from which the workers are drifting and in the areas to which they are going there is a terrible problem for industry. In the South, to which the men are drifting, there is sheer chaos, with an enormous number of vacancies. One of the Amendments lays stress on the need for full employment in all parts of the United Kingdom, and that is the nub of the matter. The Chancellor has put forward different reasons for introducing a payroll tax from those which he mentioned during his Budget statement. He then said:
"The use of such a measure as an economic regulator would have the added advantage that when we are faced with a situation of chronic shortage of labour it would act as an incentive to economy in the use of manpower and to investment in labour-saving equipment"—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 808.]
I believe that the Government panicked because of the position in the motor car industry. When there was a great slump in that industry they believed that a great


deal of the skilled labour would go to other industries which required such labour. Because that did not happen the Government panicked, and we then had talk of a pay-roll tax. In the light of the Chancellor's arguments in his Budget statement it does not seem to make any sense to apply this kind of tax in areas in respect of which we are already worried because of the difficulty of persuading industries to go there to provide employment. It will be the negation of everything that the Chancellor has argued for if we impose any type of restriction upon an employer who has gone into a special area under the terms of the Local Employment Act, which we are using in order to try to encourage further employment.
If the right hon. and learned Gentleman says that this tax is now applicable to all areas, it follows that no area should be scheduled under the Local Employment Act. We are spending a considerable amount of public money in trying to induce employers to go into the special areas, and now it seems that we are to spend even more public money in setting up an agency under which we can draw in a payroll tax as a disincentive to employers to go to those areas. We believe that there is a case for increasing the number of areas scheduled under the Local Employment Act, but, in effect, the Chancellor has told us that there is no longer the slightest reason for operating the provisions of that Act. That is what it means if he seeks to impose a payroll tax of this type.
6.0 p.m.
I do not believe, however, that the only disadvantages will come in areas which are special areas under the Local Employment Act. Some of my hon. Friends argued cogently, and I should have thought conclusively, the effect which such a tax will have in these areas. Will it be of any benefit to areas where there is full employment and where there are more vacancies at present than the Minister of Labour can find people to take up? What advantage will it be to them? If we take the South-East, there is a very great number of vacancies, far and away more than the people applying for them. If we impose an overall 4s. on every employer in that area, what is likely to be the result? Can it be that by doing that we are giving any incentive to any

one set of employers to get rid of labour which they do not need?
The fact is that all we do is to increase the industrial overall costs of every single employer in the area and all of them will remain in precisely the same position so far as labour is concerned. If we are to make this effective, we shall have to be discriminating, first on geographical grounds and, secondly, on industrial grounds; that is to say, against one industry as distinct from another. This payroll tax is neither the one nor the other. I think the hon. Member for Ilford, South made the point that it merely increases industrial costs by some £200 million. I think that the hon. Member for Wycombe put it another way. He spoke in terms of increasing costs by 1d. an hour to employers.
What would be the cry of the right hon. and learned Gentleman if the trade unions immediately demanded an increase of 1d. an hour in pay? He would say that this was anti-social in every way, that it was inflationary and that it would have the worst of all possible effects. I challenge him to show me one iota of difference between the employees' demand for 1d. an hour more and what he is doing by introducing this payroll tax.

Mr. Lloyd: After all, the purpose of this is to reduce consumption and to reduce spending. In the one case, the money goes to the Exchequer and, in the other, into private pockets. That is the difference.

Mr. Lee: Now the right hon. and learned Gentleman has changed his ground again. This is an impost on industry; it has nothing to do with the shortage of labour, but is merely a question of providing something which raises more revenue for the Exchequer. In doing that, the right hon. and learned Gentleman is knowingly increasing industrial costs of production at a time when he is asking us to go into the export markets with a better chance of competing with our competitors. Whichever way he takes it, I suggest to him that he has not made out the slightest case how he is to get a better distribution of labour, especially skilled labour, in the areas where there is already unemployment and where we are trying, by the use of the Local Employment


Act, to induce employers to go and to provide decent employment for people there. There is no case for the payroll tax there.
I have tried to argue that in the areas outside, in the reception areas of the sort to which, as we know from the recent Report, the drift from the North is coming and will become greater probably every year, this will not enable any employer to change his position with regard to filling vacancies. Every employer will be in precisely the same position in which he was before the tax was introduced, the only difference being increased costs in consequence of what the right hon. and learned Gentleman was doing.
Therefore, I ask the right hon. and learned Gentleman now to realise that while the Minister of Labour can quote a figure of 300,000 unemployed, the Chancellor cannot say that because there is a global figure of 300,000 unemployed in the United Kingdom we need not bother about the unemployment in those areas. That is not the case at all. Hon. Friends of mine have said, and more will say it in this debate, that in their areas it is fantastic to talk in terms of there being a chronic shortage of labour. I do not want to touch on an Amendment which we shall be discussing later, but there are areas in which there are thousands of young people who have not got a cat in hell's chance of getting a decent job in the next few weeks. There is chronic unemployment in several areas.
How can the Chancellor argue that because he can point to a percentage in the overall figures there is no need to consider the situation in each of these areas? I submit to him that by the wording of our Amendments we give him a chance to say that, on reconsideration, he will agree that there are such areas, and that, by accepting the words we are suggesting, he will show the people in those areas that he is not unmindful of the fact that the words
in all parts of the United Kingdom
include those areas where there is unemployment.
In the general sense of the Clause, we are at one with the hon. Member for Wycombe and some of his hon. Friends who have said that they do not like the

payroll tax. We shall give them an opportunity of joining us in order to ensure that it never goes on the Statute Book. If we have to wait until the Question "That the Clause stand part of the Bill" is put, and if they can contain themselves with what patience they can find, we shall try to give them the chance of supporting us on the Amendment. Let them give an earnest of their own feelings and come into the Lobby with my hon. Friends to ensure that an Amendment of this type, limited as it is but which shows good faith with the people in areas where there is unemployment, should become part of this Clause.
I ask the right hon. and learned Gentleman to reconsider it. More speeches will be made from this side of the Committee, because the right hon. and learned Gentleman has not satisfied those of my hon. Friends who have already spoken or those who still wish to take part, and I ask him to look at the Amendment again. We feel that there is nothing wrong in accepting the fact that he misjudged the temper of the Committee or the real issue of the Amendment, because he had not had it explained to him. If he will do that, he will go some way towards repairing the damage which has already been done. Whether he means to use the regulator or not, the fact that he wishes to put it on the Statute Book is doing no service to industry. I ask him to reconsider what he said, and, if he will not, I invite hon. Members opposite to join us in the Lobby.

Mr. John Hall: Perhaps the hon. Gentleman could persuade his hon. Friends to hasten the end of the debate on the Amendment so that we can get on to the debate on the Question "That the Clause stand part of the Bill."

Mr. Lee: If the hon. Gentleman can persuade the Chancellor to accept the sense of what we are saying, we shall get to it immediately.

Miss Margaret Herbison: I listened very carefully to the Chancellor of the Exchequer, and I must say that his reply fills me with dismay. He showed very clearly why he wished to have his regulator. The time may come, he said, when there would be a need to curtail purchasing power. In other words, it is not so much a regulator to get workers from one area to


another, though that, in effect, is what it will do, as to bring about a measure of unemployment, because that is the only way in which this regulator could work, to bring about a curtailment in purchasing power.
The Chancellor's great supporter, and supporter of all Ministers, the hon. Member for Barry (Mr. Gower), made much the same case. He said that to be effective the regulator must apply at the maximum all over the country. The Chancellor said that to restrict the economy the regulator must be widespread in its impact. These two statements amount to the same thing.
The hon. Member for Barry urged us on this side of the Committee, rather than to press our Amendments, which we still have every intention of pressing, to work for an early removal of the maladjustments in our economy that might lead to the use of the regulator. I am sorry that the hon. Member for Barry is not present now. If he and his hon. Friends would use all the power they have to inject into the Government some integrity, some honesty of purpose, they would be going far to get rid of the maladjustments in our economy.
My hon. Friend the Member for Fife, West (Mr. W. Hamilton) asked what the Chancellor would consider to be a boom. I have been examining the words of the Chancellor and other hon. Members opposite. It seems that we have slumps under a Tory Government in the middle years between General Elections and booms usually in the year before a General Election. It is that utter disregard for the general well-being of the country which makes it impossible for the Government to solve the economic difficulties which so often face us. That is my answer to the hon. Member for Barry. If he should get the Government he supports to face the difficulties which we are undoubtedly having in the country rather than to bring in stop-gap measures immediately before an election to make it look as if we had a boom and then, between elections, to ask for power to bring in a regulator such as that for which the Chancellor is asking.
Mention has been made of the Local Employment Act. From the speech of the hon. Member for Barry, one would have thought that that Act had brought great prosperity. When pushed, he had

to agree that that prosperity started before under an Act which was the child of the last Labour Government. In Scotland, we have still a long way to go before we can approach the situation there seems to be in South Wales. The Local Employment Act is supposed to help areas such as ours.
Scotland has at present a high rate of unemployment compared with the rest of the United Kingdom. In scheduled areas such as Greenock and Port Glasgow the rate is 7 per cent. In the scheduled areas of the largest industrial county in Scotland there is more than 4 per cent. unemployment. As my hon. Friend the Member for Motherwell (Mr. Lawson) said, at the moment when the Chancellor is asking power to introduce this regulator, in Scotland seven people are chasing after every two jobs.
There was a great song and dance during the last General Election—the announcement, I understand, was made in Scotland—about the Bill that the Government were to introduce to deal with areas of high unemployment, the Local Employment Act, which is now on the Statute Book. In Scotland, we are still waiting for results from that Act. The Act gives the Government power to build factories and to use public money to build them. We had that power before the Act was passed. It gives the Government power to make loans to industrialists at a lower rate of interest than that at which they could obtain the money in the open market. Public money is to be used for that kind of work. Suppose that when the advance factory not yet filled in Coatbridge and that which is about to be started in my constituency are built, and they are in operation, the Chancellor decides that he needs this regulator. Then those advance factories will remain empty and the public money put into them will have been lost. What a topsy-turvy way to try to deal with the problems of our country.
6.15 p.m.
I am delighted that, although we are not getting support for our Amendments from hon. Members opposite, it seems probable that we are to have some support from them in complete opposition to the Clause. I hope that when we vote on it those who have shown themselves so opposed to it will have the guts to go into the Division Lobby against


the Clause. This is an indiscriminate instrument. In Scotland, and in England we have had previous experience of indiscriminate weapons, which are all that this Government can think of. The high Bank Rate hit Scotland during a time of restriction far worse than it hit any other part of the United Kingdom. It brought about a far greater rate of unemployment there than in any other part of the United Kingdom and we still have not got over it. The Chancellor must know that that is true.
That came about because we had a Government who, rather than facing the need for certain economic and financial controls which would be discriminate, preferred to depend on the indiscriminate method of the high Bank Rate. This regulator, which the Chancellor is asking for power to introduce if he needs it, is just as indiscriminate a weapon as a high Bank Rate. We know that it would do very great damage to our people.
Is this not nonsense when we see the great exodus from our country every year? Those people are going to the Midlands and particularly to London and the surrounding area. That does not make things easier in London. They are a headache for every local authority in London.
These people come from Scotland and have no house to go to. Some are fortunate in having relatives to whom they can go. They either leave their families at home and live as lodgers with their relatives—which, of course, is very expensive for them if they do so for a long time—or they bring their families and cause grave overcrowding in the homes of their relatives in London. The local authority has some time to find housing accommodation for them. Does it not seem mad when we consider that they could be housed perfectly well in their own communities?
Then there are all the problems of transport caused in London and its surroundings, the problems of getting people to and from work. Those problems are very great indeed and the Government have not been able to solve them. Do they not realise that if they bring in this indiscriminate regulator they will add greatly to those problems?
Turning to another matter, which, I hope, will never concern us, there is the question of defence. In view of all the industries which are extending and the rapid increase in population, if it ever came to a question of evacuating these people, how difficult that would be. There has been no planning and no foresight shown by the Government, yet they are willing to go ahead with this sort of proposal.
The Chancellor said that there was no need for this Amendment because in the Economic Survey reference has been made to full employment. I have said enough to show that we do not pay much attention to those few words in the Economic Survey. He said that in introducing his regulator he would have regard to its effect on all areas. I wonder what he means by that. If hon. Members from Scottish constituencies and our hon. Friends from North Wales are able to show him today, in the rest of this debate, that the regulator will impose a great hardship on thousands of people, will he then decide that he does not want even to ask for this power?
My hon. Friend the Member for Motherwell spoke vividly about those industries in areas where there is a shortage of labour which would prefer to pay this imposition rather than lose their workers. That would not obtain in Scotland or in any other area of high unemployment, because in those areas employers would realise that they could dispense with their workers and would have a chance easily to pick them up again if the Tories were near an election and there were a boom.
This seems to me one of the most vicious powers for which any Chancellor has asked. I ask the right hon. and learned Gentleman to take into account the strong arguments which have been made both from this Front Bench and the back benches against it and to realise that we in the areas of high unemployment will oppose it whenever we can.

Mr. Rankin: Before the Chancellor left the House I asked him to try to appreciate the situation in Glasgow in particular and in Scotland in general in which this regulator would work. I think that the Economic Secretary to the Treasury is familiar with it because he


has heard a good deal about shipbuilding in Scotland in other debates. He has taken part in some of them and he knows that the proposed aid to the industry is unique and is not a matter of policy—as we were told last Wednesday.
The Chancellor is imposing this regulator on a source of wide employment in my constituency and on an industry which, according to the Press today, shows a decline in its launchings of 50,000 tons. If that decline continues throughout the year, the total diminution in output in shipbuilding for the year will be 25 per cent. of the launchings which we had in 1960.
That emphasises that the position is grave, and it indicates what we all know to be true and what has been amply demonstrated in the debate by my hon. Friends—that already in Scotland there is a shortage of employment. We know from the remark made on Second Reading by the Chancellor, quoted today, that the purpose of this tax is to deal with a chronic shortage of labour. But it is to be applied in a country in which there is a chronic surplus of labour. It is proposed in the Bill that in order to equate demand to existing resources, this tax should be used in an area where already there is a chronic shortage of labour.
In his speech the Chancellor tried to face the problem. As far as I was able to take down his words he said, "Of course, I will pay special regard to areas of unemployment". Immediately, then, his regulator is not indiscriminate; this afternoon he has introduced an element of discrimination in its application. This is the point which I want to pursue.
If he is to have particular regard to areas of unemployment, how will he use the regulator? Will he squeeze off surplus labour in Scotland? If so, what will he do with that labour? The theory behind his tax is that in order to help to modernise he will squeeze off surplus labour so that it will go to some other employment. If he uses that policy in Scotland, to what end will he apply the labour which he squeezes off? Will he put it on National Assistance? We deserve a clearer answer to that question than we have had so far. We think that it is impossible for him to use the regulator in this way for the simple reason that it would add confusion to that which

already exists and would continue the depopulation of Scotland and the move of population towards the South.
We know that it will not mean moving the population in Scotland farther north because our problem already is to keep people in the north—and it is no very easy problem, as we are discovering from morning to morning, latterly from afternoon to afternoon, and perhaps very shortly from evening to evening. It is a difficult and complicated problem to solve. We cannot get the people to move northwards. They move southwards, with all the difficulties which have been pointed out by my hon. Friend the Member for Lanarkshire, North (Miss Herbison).
There is another alternative if the Chancellor is to have special regard for areas of unemployment when his regulator operates, if it operates at all. Will he show his special regard by creating special schemes to deal with those who will be squeezed out of their jobs? As that seems to be rather a foolish proceeding, will he take what appears to me to be the alternative method of applying this tax—to exempt Scottish employers altogether from its application? Does he propose to do that if he is to have special regard to those areas of unemployment? He can do so by saying that Scotland is a special area—which he has said already he has in mind—and by saying, "We will keep Scotland out altogether of the scope of this tax." Does he propose to do that?
6.30 p.m.
Or, if the right hon. and learned Gentleman is going to have special regard to areas of unemployment, as he seemed to indicate when he was making reference to Northern Ireland, will it manifest itself by his still collecting the tax from Scottish employers and then saying to them through the Secretary of State, "Here is money given back to you in order that you may be able to go ahead and carry out schemes of employment for those who will be unemployed as a result of the policy of my regulator"?
It seems absolutely daft to adopt a policy of that nature, but the right hon. and learned Gentleman himself has committed himself to the use of the phrase that he "will have special regard to areas of unemployment", and, of course,


if he is going to have special regard, then we are entitled to know what that special regard will be, and we are also entitled to know how it will manifest itself. He suggested that in Northern Ireland the tax should be collected and then paid back to Northern Ireland. Is that what is going to happen in Scotland? It would be paid back to Northern Ireland, say, and the money would be used for the purposes of creating employment in that part of the United Kingdom. Is that what is going to happen in Scotland?
The Chancellor has committed himself to that view, and in my opinion it is his duty to the Committee now to tell us more clearly than so far we have been told how exactly he will utilise this regulator so that it will not impinge on the Scottish economy to its still further detriment.

Mr. Ross: The Chancellor of the Exchequer unburdened himself about his concern that he had been misunderstood on all this, that he had got a bad Press, that Members of Parliament as well as people outside had picked him up wrongly, that he did not really mean that the application of this regulator was to cause unemployment. If so, he has got only himself to blame. I think that it was no accident that with every day which passed during our debates on the Budget and, in particular, on this regulator we had a different interpretation of its purposes and emphasis. I doubt, indeed, whether we have got the last one yet.
It is quite clear to me now, from what the Chancellor of the Exchequer has said and from the reactions on the other side of the Committee, that the presence of this regulator as it stands is not so much to save the nation from economic crisis as to save the face of the Chancellor, because of his insistence that it is required only for a short time and that he will think again about the permanent means, and that this is the last we shall ever see of this one.
We, however, have to accept its workings in relation to the purposes as expressed by the Chancellor of the Exchequer, and our concern at the moment is not with the principle of the thing—I think that, when we get the opportunity we shall express our dis-

approval of that principle—but with the effect of it if it were applied.
The Economic Secretary—I think that it was upon the second or third version of the explanation of regulator No. 2—said that it was for the purpose of raising revenue, but raising revenue at such a time and in such a way that it would not have a discriminatory effect upon industries. He instanced—if I could have his attention occasionally—the effect of changes in hire purchase. He thought it rather sad to have this effect on particular industries. The implication, I thought, was that, rather than use that type of regulator, be is prepared to use this one, which has a more widespread effect.
We go back to what the Chancellor said when he was seeking our sympathy in his choice of the weapon. He said that whichever one he used he must hurt somebody. What we are concerned about is that, if he chooses this one, he will hurt areas where employment is already badly neglected and which, in the past, in the choice of economic weapons, have been hurt. That is the position. My hon. Friend has instanced that in relation to municipal credit, industrial expansion in Scotland, unemployment in Scotland, and the negative working of the Local Employment Act.
But this will do exactly the same, and what we are entitled to ask is why it is that he is prepared to hurt Scotland—or the North-East, or Northern Ireland, or anywhere else? He presumes, when he places before us for consideration his problem, that there is a boom in England, in the Midlands and elsewhere, which is likely to get out of hand and that if he does not take action Scotland as well as the rest of the country will be hurt. He presumes that in what he is now suggesting, and we ask how he can reconcile that with the fact that when this regulator is applied it will still further hurt and impede the development of industry and employment in Scotland, and why, therefore, it is the only one that he can apply to the problem.
That is why we suggest to him that whatever instrument he uses he should not use this one. He must always bear in mind an area which is already badly hurt industrially and where employment is adversely affected. The figures have been given and I will not repeat them.


I want him to appreciate them. The former Chancellor, now Lord Amory, said, in Inverness, that he would not rest while the unemployment figures in Scotland were as bad as they were compared with the rest of the United Kingdom. We know what has happened to him. He is resting elsewhere. First, he was found noble pastures; now he is going to find wide open spaces in one of our Dominions.
What I want to know is what the present Chancellor will do. I do not know who advised him about this. I have a feeling that it may have been the Patronage Secretary. However, when we examine the principle of this regulator in relation to the purposes which the Chancellor declared, it can be seen to be the most illogical piece of financial planning—anyway, that ever I came across.
Let us consider it in relation to areas with a chronic labour shortage. First, labour, say, in Scotland. All that the Chancellor spoke about was the chronic shortage of labour. So he applies an impost of 4s. per person per job. Where there is a chronic labour shortage is exactly the place where there are the highest earnings. Compare that with Scotland, where there is a shortage of employment and where earnings are very much lower. There the addition of the 4s. would have a greater effect than it would have in an area of chronic labour shortage.
If the regulator were to lead to the disgorging of labour, it would not in areas of chronic labour shortage, but only in quite other areas altogether. The very fact that there is chronic labour shortage will mean that to add 4s. will not make all that difference, and the Economic Secretary should know that. Goodness gracious, he was one of the Ministers who said at that Box, in July, that there was to be an extra 1s. per person, quite apart from this 4s., and he did not seem to think that it would have an effect on chronic labour shortage. In the very same areas in April an extra 4s. to 5s. was put on, and if we consider the employer plus the employee it amounts to an extra 10s. Will that have any effect on the chronic labour shortage?
The Chancellor says that he wants to curb consumption and reduce purchasing power. I should have thought this would

be done by applying some restriction to the purchasers. But the person who is to pay this tax is the employer. What effect will this have on goods that are not for purchase in the home market? It will drive up the price. We are told, and have been told all along, that one of the troubles about Scottish industry is that we have got more than our share of heavy industries—heavy engineering, shipbuilding, coal mining, and the rest—all of which are industries of high labour content and many of which are tied to capital goods production for export. Why should the Government go out of their way deliberately to hit that type of industry when the Chancellor really wants to get at the consumer goods industries?
The Chancellor should think again. It is not good enough just to put in these provisions. They will not help. The Chancellor is honest. He refuses to accept this Amendment because he would never be able to apply it if he took into account what we ask him to take into account, namely, to have regard for full employment in all parts of the country. If he were to do that, the Amendment would never be used. I hope that hon. Members opposite will agree with us. I am sure that they agree with us in their hearts, and I hope that they will join us in the Lobby.
Incidentally, I should like to know where all the Scottish Tories are today. [An HON. MEMBER: "At Ascot."] An hon. Friend of mine suggests that they are at Ascot. I am sure that they are not. We must keep this debate going, because I am sure they are all in the Library polishing up rebellious speeches on this point. The understatement of the afternoon was made by the Chancellor of the Exchequer when he said that this proposal was not an unqualified success. It did not even start to be a success. As a matter of fact, at the Scottish Unionist Conference, in Ayr, a resolution attacking the Government on this matter and their industrial policy in Scotland was carried.
Where are the Scottish Tories? They should be carrying out their mandates from the Tory conference. But we hay., not heard one of them today attacking the Government on their record or referring to the beneficial effect that this Amendment would have on the proposal relating to regulators. I hope that the


Chancellor will have second thoughts about this Amendment and, if not, that hon. Members opposite will join us in the Lobby.

Mr. Baxter: I hope the Committee will forgive me for intervening at this late hour. I know that most of the arguments have been adduced to prove conclusively that this tax should not be imposed upon Scottish industry. I appreciate that we are coming near to the end of the road and that the Chancellor has indicated that he does not propose to accept the Amendment. But I cannot understand why he should have intervened to say so without first hearing all the arguments which have been put forward very clearly and concisely by my colleagues.
6.45 p.m.
I should like to direct attention to one aspect of this question on which the Chancellor himself commented after my intervention. He said that the main purpose of this tax was to curb inflation. If that is so, that seems to be a reasonable point of view if the end were to justify the means. But the right hon. and learned Gentleman then says that, while that is the purpose, he is excluding the whole of Northern Ireland from the ambit of this tax. That presupposes that it is reasonable to exclude certain parts of the United Kingdom from the application of the tax. It does not seem logical, on the one hand, to argue that it is necessary to apply this tax throughout the length and breadth of the British Isles in order to curb inflation, and then to exclude part of the British Isles from the application of that tax. If he feels able to impose the tax on Northern Ireland industries and then to hand it back—which is the same as not taking it at all—it seems unreasonable not to extend that concession to Scotland.
Is it not the fact that the shipbuilding industry of Northern Ireland competes with the shipbuilding industry of Scotland? Do not other industries of Northern Ireland compete with industries of Scotland? I read the other day that Scotland had lost two very important industries to Northern Ireland only a week or two ago. That means that we in Scotland will be placed in a very unfortunate position as compared with Northern Ireland.
I do not object to the Chancellor excluding Northern Ireland if in principle he is doing it because he thinks there is a high incidence of unemployment there, but if that argument is good for Northern Ireland it should be equally good for Scotland. That is the purport of this Amendment, and that has been the point of view expressed by my numerous colleagues this afternoon.
It would be wrong of the Chancellor not to accept this Amendment, on the basis of equity. It does not necessarily follow that I agree with the principle of the 4s. payroll tax. It is one of the most foolish taxes that have been imposed in the history of the British Parliament. There are ample methods in the possession of the Chancellor for curbing inflation. In my speech in the Budget debate I referred to some simple methods which could be adopted for this purpose. It is fundamentally wrong to introduce new methods of taxation when new methods are not necessary.
How can a 4s. payroll tax curb inflation? Can the Chancellor or any of his colleagues explain simply how this can be done? It adds to the cost of the end product. The employers and the companies will pass on the cost of the payroll tax to the consumer. They cannot pass it on to the employees by higher pay-as-you-earn deductions or anything like that. They must add it to the cost of the end product. They means that in the competitive world of today we are helping to price our products out of the world markets, and it seems illogical to me that we should be doing that when we are at the same time trying to persuade our business people to place greater emphasis on the export of the goods that they produce. It is obvious that, if this tax is imposed, it will not in any way curb inflation but will end by adding to the price of goods we export.
It cannot curb inflation, because grocery businesses and hardware stores, to take only two examples, have exceedingly high stocks. In some instances their stocks would last them for six months or a year. They do not need to buy more stocks. They only need to keep going until the payroll tax is taken off again. Instead of curbing inflation, the Government will only add to the cost of the goods which we must export.


Small businesses will stop buying for the time being and work upon their stocks for at least six months or a year.
This is a most dangerous tax and a foolish method by which to try to work our fiscal policy. It is fundamentally wrong to introduce new methods of taxation when there are ample means at the Government's disposal to curb inflation, an objective which is so much desired—not that I personally desire to see inflation curbed to a great extent, because an inflationary position in a country is a happy and a good condition for a country. In no condition in the history of Scotland or Britain has the purchasing power of the working classes been increased to a greater extent than it has in an inflationary condition. I challenge any hon. Member to tell me a period in our history when controlled inflation was not a good thing for the working classes. It is dangerous to be dogmatic about curbing inflation in this way or that.
I will mention one small item which is of some interest to Scotland. We pay a great deal of lip service to the need to encourage the tourist industry in Scotland. The Scottish Grand Committee has been arguing for weeks on end about the Highlands. The Highlands are gradually being depopulated. They are very dependent at present upon the tourist industry. Many Scottish hotels employ people in the areas of the Highlands. Those hotels will have a very grave burden to bear if the tax is imposed. They will be unable to carry the burden. I have received many communications from those responsible for hotels and hydros expressing their grave concern about the effect the imposition of this tax will have upon their undertakings.
The Chancellor of the Exchequer should undoubtedly think again about imposing this tax. If he is not prepared to abandon it altogether, he should certainly exclude Scotland from the effect of its operation, because the many arguments which have been advanced today prove conclusively that it is not in the best interests of our country. It appals and amazes me that men of Cabinet rank apparently have not the ability to recognise the simple methods by which they will ultimately bring ruination to our country. They should

look at what happened about the payroll tax in Australia. They should realise how anxious even that country is that it should be wholly abandoned. This is a stupid tax. It should not be imposed. The Chancellor will be condemned in the years ahead if he goes on with this foolish blunder, which is so evident to everyone but himself and the few colleagues he has around him.

Mr. Mitchison: I do not propose to take up much of the time of the Committee or to touch on the wider points which will be open on the Question "That the Clause stand part of the Bill". This is a limited Amendment and my point is, I hope, a genuinely British one. It relates to the whole country. The present test of whether one of these Orders can be made is that the Treasury must think
that it is expedient so to do with a view to regulating the balance between demand and resources in the United Kingdom".
I do not pause to discuss what that means or how
the balance between demand and resources in the United Kingdom
as a whole can be regulated when the balance in different parts of it seems likely to be so different.
The test posed is a test of the sort of character which the Chancellor indicated. It is a measure intended to combat inflation. It is intended to take a considerable sum of money out of circulation and to limit the purchasing power of the community accordingly. That is the type of test indicated.
The object of the Amendment, which the right hon. and learned Gentleman was pleased to consider unnecessary, is to add to that test, which is really a banker's test, a Treasury test, a financial test, one other test which seems to us on this side of the Committee to be at least equally important. When attacking inflation and taking Treasury or bankers' methods of this kind, when using another blunt instrument of a purely financial character, it is possible to overdo it and to find, when the Order has been imposed, that unemployment has been created as a whole, or at any rate in some parts of the country, or that, if it is there already, it has been increased.
The Chancellor assures us that it is part of the Government's policy to preserve full employment. We have heard several stinging comments on the Government's policy in that respect. Even if that is the Government's policy, that is no reason for not putting in a reference to the considerations which are to be borne in mind if an Order of this sort is to be made. If it is left out, the Order will be made on financial considerations of the narrowest kind and the blunt instrument will be applied for the purpose of regulating a balance. It may well have the effect of putting a number of men out of work or causing those who have been looking for jobs to give up all hope of finding them.
It is ridiculous that the Chancellor, when introducing a Measure of this sort and when professing at any rate to have regard to the necessity of maintaining full employment, should object to the inclusion in the Clause of any reference to it. The Order will have to be approved by Parliament, and it may be in order to refer to full employment. I was not considering narrow questions of that sort. The question will be whether the Order was rightly made or not. All that the right hon. and learned Gentleman or his successor in office will have to show is simply that the Order is made because the Treasury thinks it
expedient so to do with a view to regulating the balance between demand and resources in the United Kingdom".
Parts of the country, including Scotland and elsewhere, where there has been heavy unemployment will have to suffer because the Chancellor thinks this is the right way of regulating the balance and does not consider it necessary, as indeed it is not in the terms of the Clause as it stands, to pay any regard whatever to the need to maintain full employment.
7.0 p.m.
It is unlikely that this power will ever be used, but, if it is to be used, it will be a very powerful weapon indeed, not merely for the purpose for which the Chancellor intends it but for a host of other purposes for which he does not intend it. In those circumstances it is altogether wrong to look to striking a balance on some point or other without regard to the effect that it is going to have on full employment.
We have had this in the history of this country for decades past—Chancellors

moved by financial considerations or moved by the difficulties of some foreign exchange crisis, trying to deal with inflation, trying to strike some vague general monetary balance, carrying it much too far and producing unemployment in this country which, in the long run, will do the exact opposite of what they intend to do by the Order they are making.
This reference is absolutely necessary. We shall not be able to argue on this point on the Question "That the Clause stand part of the Bill", and, therefore. I have confined myself to it now.

Mr. Willis: Surely we are to have a reply from the Chancellor to the speeches that have been made. [HON. MEMBERS: "Reply."] Two hours ago the Chancellor intervened and said, "I am intervening now but do not wish to stop the course of the debate."
But there is no debate if there is no reply. My hon. Friends have been adducing some extremely important arguments, especially after hon. Members had learned, as a result of the Chancellor's speech, that Ireland is to be handed back the money paid by the firms concerned. What about Scotland? The reply we got to that question was that we in Scotland do not have the same insurance card. But the object of this Amendment is to make this possible and, if the Chancellor does not think that the Amendments makes such a move possible, surely it is not beyond the wit of the Members who are lolling about on the Government Front Bench to devise words to make it possible.
Since it is recognised that Northern Ireland is in a position where it should receive special treatment, the claim of my hon. Friends—and almost every Scottish hon. Member—is that Scotland is in an equally vulnerable position. During the course of his speech, the Chancellor said, "We must accept criticism. I have accepted it and I have had a lot of it." He said that all economic regulators gave rise to criticism. But one of the general lines of criticism against economic regulators is that they are too blanketing in their effect. That criticism is levelled against every financial regulator the Chancellor uses, no matter whether it is the Bank Rate, hire purchase or any other method.
Opposition hon. Members are now attempting to provide the Chancellor with the opportunity, for which he should be thankful—and are fulfilling their customary rôle of assisting the Government—to insert words into the Clause which will enable him to meet one of the most important lines of criticism made against economic regulators: that they are blanketing in their effect.
That was the first leg of the Chancellor's argument. I had intended to relate just what was his second leg but, on reflection, I rather think that he stood on only one leg. Perhaps the second leg of his argument was the sentence he used: "I want to act quickly and effectively." May I inform the Chancellor that it is no good being so effective that he will kill the patient? He may want to act quickly, but I do not think that he wants to flake him out.
This Measure, however, will do exactly that in Scotland. It is all very well to say that Scotland cannot be in such a parlous position that 4s. per employee will make all the difference. The point is that it will. Some Scottish industries are in a very parlous state. My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter), spoke of the position of the hotel industry. We are trying to build up an ever-increasing period during which time the season is effective for tourism. We have had considerable success in this and whereas many hotels previously employed one or two people during the winter, some of them are now employing ten or twelve people.
This proposed measure will deal a hard blow on them. They just cannot afford it. It might be right for London, Birmingham and elsewhere it will do nothing but harm for Scotland.
Why has almost every speaker been a Scottish hon. Member?

Mr. Ross: Scottish Labour hon. Member.

Mr. Willis: Precisely. It is because Scottish hon. Members know from past experience that every time we have economic regulators to prevent inflation by an adjustment of the Bank Rate or something else, Scotland is more seriously hit than is any other part of

the country, and takes far longer to recover. That has been our experience in Scotland over the past 15 years and that is why Scottish hon. Members feel so strongly about it.
The Chancellor might at least have the courtesy to reply to some of the arguments advanced during this debate, after having told us that we could go on talking. The point is that we do not want to go on talking. We want a reply to our arguments. No wonder the Tories have been losing thousands of votes in Scotland. The Tory Party is condemning itself in Scotland and I would have thought that, in view of this, that the Chancellor—or one of his Front Bench colleagues—would have done hon. Members the courtesy of endeavouring to reply to some of the important and effective points that have been made.
It makes a farce of the proceedings of the House of Commons for a Chancellor to say that hon. Members should go on talking—and then he does not reply. The Chancellor is virtually saying: "We have made up our minds, no matter what are the arguments". That is a contemptuous manner in which to treat the House of Commons and it reduces our debates to a farce. I am sure that the right hon. Gentleman does not wish to do that. I am sure that he wants to be fair and I hope, therefore, that he will take this opportunity to reply.

Mr. Lloyd: I do not think the suggestion that I have been guilty of lack of courtesy to the Committee is worthy of the hon. Gentleman the Member for Edinburgh, East (Mr. Willis). I have listened to a great deal of the debate, both before I spoke and afterwards, and I tried to answer the arguments that were put forward.
The main point made by the hon. Member for Edinburgh, East is that Scotland will be more severely hit than any other part of the country. Has the hon. Gentleman stopped to think that Scotland may be hit harder if the economy there and in other parts of the country gets out of balance?
I agree that certain parts of the country may suffer the most if our economy goes wrong, and that has been very much in my mind. This Amendment deals with consultation with the President of the Board of Trade and the Secretary of State for Scotland.

Mr. Ross: Where is the Secretary of State?

Mr. Lloyd: I have already indicated that this would be a Government decision, and it follows, therefore, that the President of the Board of Trade and the Secretary of State would obviously have to take part in the decision before this regulator was used.
On the second point, I have said clearly that the Government are committed to full employment, and the decision whether or not to use this regulator and whether or not to accompany it with other measures to deal with special areas will, obviously, be very closely considered by those who have to decide. But I adhere to my original position. I think that it is necessary to give the Government this year, subject to certain safeguards, these powers of economic regulation. I believe it to be in the national interest. I should not have proposed it if I had not believed that. I believe it to be in the interests of the nation as a whole and in the interests of Scotland.

Mr. Baxter: Will the Chancellor explain why there should be fish made of one and flesh of another? He proposes to give back any tax to the industrialists of Northern Ireland. I have no objection to that, of course, but if that is good for Northern Ireland it is good also for Scotland. The Chancellor must have regard to that before going very much further. We shall not stand this treatment of Scotland. We are entitled to see that our people have a fair deal and are given an opportunity to work.

Mr. Lloyd: I am quite prepared to deal with that point now if I am in order. The position in Ulster is that there is special legislation and a special fund, it being a different power—

The Temporary Chairman (Sir Samuel Storey): There is another Amendment on the Notice Paper. I think that matter must be discussed when we reach it.

Mr. G. M. Thomson: Will the Chancellor tell the Committee where all his colleagues from the Scottish Office are? There is a fairly full Committee present for this very important stage of the Finance Bill. I cannot see a single Scottish Member, with the honourable exception of the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon), who is there, I assume, because he is still tied to the Minister who is sitting on the Front Bench. It is disgraceful that Scottish Members and Scottish Ministers should be absent from the debate. One wonders whether all the Scottish Ministers have gone on strike and, because of the concession made to Northern Ireland, have deserted the Scottish Unionist Party in order to set up a secessionist movement on the Northern Ireland model.

Mr. Lloyd: The reason is probably that my right hon. and hon. Friends from Scotland have complete confidence in me because I was educated in Scotland.

Question put, That those words be there inserted:—

The Committee divided: Ayes 181, Noes 247.

Division No. 196.]
AYES
[7.12 p.m.


Alnsley, William
Crossman, R. H. S.
Galphern, Sir Myer


Albu, Austen
Cullen, Mrs. Alice
George, LadyMeganLloyd (Crmrthn)


Allaun, Frank (Salford, E.)
Darling, George
Ginsburg, David


Awbery, Stan
Davies, G. Elfed (Rhondda, E.)
Gooch, E. G.


Bacon, Miss Alice
Davies, Harold (Leek)
Gordon Walker, Rt. Hon. P. C.


Baxter, William (Stirlingshire, W.)
Davies, S. O. (Merthyr)
Gourlay, Harry


Benson, Sir George
Deer, George
Grey, Charles


Blyton, William
de Freltas, Geoffrey
Griffiths, Rt. Hon. James (Llanelly)


Bowden, Herbert W. (Leics, S. W.)
Delargy, Hugh
Griffiths, W. (Exchange)


Boyden, James
Diamond, John
Gunter, Ray


Braddock, Mrs. E. M.
Dodds, Norman
Hale, Leslie (Oldham, W.)


Brockway, A. Fenner
Driberg, Tom
Hall, Rt. Hn. Glenvil (Come Valley)


Broughton, Dr. A. D. D.
Ede, Rt. Hon. C.
Hamilton, William (West Fife)


Brown, Rt. Hon. George (Belper)
Edelman, Maurice
Hannan, William


Butler, Herbert (Hackney, C.)
Edwards, Rt. Hon. Nees (Caerphilly)
Hart, Mrs. Judith


Butler, Mrs. Joyce (Wood Green)
Edwards, Walter (Stepney)
Hayman, F. H.


Callaghan, James
Fernyhough, E.
Henderson, Rt. Hn. Arthur (Rwly Regis)


Castle, Mrs. Barbara
Finch, Harold
Herbison, Miss Margaret


Chapman, Donald
Fitch, Alan
Hewitson, Capt. M.


Corbet, Mrs. Freda
Fletcher, Eric
Hill, J. (Midlothian)


Craddock, George (Bradford, S.)
Foot, Michael (Ebbw Vale)
Holman, Percy


Cronin, John
Forman, J. C.
Howell, Charles A. (Perry Barr)


Crosland, Anthony
Fraser, Thomas (Hamilton)
Hoy, James H.




Hughes, Cledwyn (Anglesey)
Marsh, Richard
Skeffington, Arthur


Hunter, A. E.
Mason, Roy
Slater, Mrs. Harriet (Stoke, N.)


Hynd, H. (Accrington)
Mendelson, J. J.
Slater, Joseph (Sedgefield)


Hynd, John (Attercliffe)
Millan, Bruce
Small, William


Irving, Sydney (Dartford)
Milne, Edward J.
Smith, Ellis (Stoke, S.)


Janner, Sir Barnett
Mitchison, G. R.
Snow, Julian


Jay, Rt. Hon. Douglas
Monslow, Walter
Soskice, Rt. Hon. Sir Frank


Jeger, George
Moody, A. S.
Spriggs, Leslie


Jenkins, Roy (Stechford)
Mort, D. L.
Steele, Thomas


Johnson, Carol (Lewisham, S.)
Moyle, Arthur
Stewart, Michael (Fulham)


Jones, Rt. Hn. A. Creech (Wakefield)
Neal, Harold
Stonehouse, John


Jones, Dan (Burnley)
Noel-Baker, Francis (Swindon)
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Jones, Elwyn (West Ham, S.)
Oswald, Thomas
Swingler, Stephen


Jones, J. Idwal (Wrexham)
Padley, W. E.
Sylvester, George


Jones, T. W. (Merioneth)
Paget, R. T.
Symonds, J. B.


Kenyon, Clifford
Pannell, Charles (Leeds, W.)
Taylor, Bernard (Mansfield)


Key, Rt. Hon. C. W.
Parkin, B. T.
Taylor, John (West Lothian)


King, Dr. Horace
Pavitt, Laurence
Thomas, Iorwerth (Rhondda, W.)


Ledger, Ron
Pearson, Arthur (Pontypridd)
Thompson, Dr. Alan (Dunfermline)


Lee, Frederick (Newton)
Peart, Frederick
Thomson, G. M. (Dundee, E.)


Lever, Harold (Cheetham)
Popplewell, Ernest
Thornton, Ernest


Lever, L. M. (Ardwick)
Prentice, R. E.
Timmons, John


Lewis, Arthur (West Ham, N.)
Price, J. T. (Westhoughton)
Tomney, Frank


Logan, David
Probert, Arthur
Wade, Donald


Loughlin, Charles
Proctor, W. T.
Wainwright, Edwin


Mabon, Dr. J. Dickson
Pursey, Cmdr. Harry
Warbey, William


McCann, John
Randall, Harry
Wells, William (Walsall, N.)


McInnes, James
Rankin, John
Wilkins, W. A.


McKay, John (Wallsend)
Reid, William
Willey, Frederick


Mackie, John (Enfield, East)
Roberts, Albert (Normanton)
Williams, D. J. (Neath)


McLeavy, Frank
Roberts, Gororvwy (Caernarvon)
Williams, Ll. (Abertillery)


MacMillan, Malcolm (Western Isles)
Robertson, John (Paisley)
Willis, E. G. (Edinburgh, E.)


MacPherson, Malcolm (Stirling)
Robinson, Kenneth (St. Pancras, N.)
Wilson, Rt. Hon. Harold (Huyton)


Mahon, Simon
Rogers, G. H. R. (Kensington, N.)
Winterbottom, R. E.


Mallalieu, J. P. W. (Huddersfield, E.)
Ross, William
Woodburn, Rt. Hon. A.


Manuel, A. C.
Royle, Charles (Salford, West)
Woof, Robert


Mapp, Charles
Shinwell, Rt. Hon. E.



Marquand, Rt. Hon. H. A.
Short, Edward
TELLERS FOR THE AYES:




Mr. Ifor Davies and Mr. Lawson.




NOES


Agnew, Sir Peter
Cole, Norman
Grimston, Sir Robert


Aitken, W. T.
Cooke, Robert
Grosvenor, Lt.-Col. R. G.


Allan, Robert (Paddington, S.)
Cooper, A. E.
Gurden, Harold


Allason, James
Cooper-Key, Sir Neill
Hall, John (Wycombe)


Arbuthnot, John
Cordeaux, Lt.-Col. J. K.
Hamilton, Michael (Wellingborough)


Ashton, Sir Hubert
Corfield, F. V.
Hare, Rt. Hon. John


Atkins, Humphrey
Coulson, J. M.
Harris, Frederic (Croydon, N. W.)


Barber, Anthony
Courtney, Cdr. Anthony
Harris, Reader (Heston)


Barlow, Sir John
Craddock, Sir Beresford
Harrison, Brian (Malden)


Barter, John
Crosthwaite-Eyre, Col. Sir Oliver
Harrison, Col. Sir Harwood (Eye)


Baxter, Sir Beverley (Southgate)
Cunningham, Knox
Harvle Anderson, Miss


Bell, Ronald
Curran, Charles
Hay, John


Bennett, F. M. (Torquay)
Currie, G. B. H.
Heald, Rt. Hon. Sir Lionel


Bennett, Dr. Reginald (Gos &amp; Fhm)
d'Avigdor-Goldsmid, Sir Henry
Henderson, John (Cathcart)


Berkeley, Humphry
Deedes, W. F.
Henderson-Stewart, Sir James


Bidgood, John C.
de Ferranti, Basil
Hendry, Forbes


Biggs-Davison, John
Digby, Simon Wingfield
Hiley, Joseph


Birch, Rt. Hon. Nigel
du Cann, Edward
Hill, Dr. Rt. Hon. Charles (Luton)


Bishop, F. P.
Duncan, Sir James
Hill, Mrs. Eveline (Wythenshawe)


Bossom, Clive
Duthie, Sir William
Hill, J. E. B. (S. Norfolk)


Bourne-Arlon, A.
Eden, John
Hinchingbrooke, Viscount


Boyd Carpenter, Rt. Hon. John
Elliot, Capt. Walter (Carshalton)
Hocking, Philip N


Boyle, Sir Edward
Elliott, R. W. (Nwcstle-upon-Tyne, H.)
Hollingworth, John


Brains, Bernard
Emery, Peter
Hopkins, Alan


Brewis, John
Errington, Sir Erie
Hornby, R. P.


Bromley-Davenport, Lt.-Col. Sir Walter
Farr, John
Howard, John (Southampton, Test)


Brown, Alan (Tottenham)
Fell, Anthony
Hughes-Young, Michael


Browne, Percy (Torrington)
Finlay, Graeme
Hulbert, Sir Norman


Buck, Antony
Fisher, Nigel
Hurd, Sir Anthony


Bullard, Denys
Fraser, Ian (Plymouth, Sutton)
Hutchison, Michael Clark


Bullus, Wing Commander Eric
Freeth, Denzil
Iremonger, T. L.


Burden, F. A.
Gammans, Lady
Jackson, John


Butcher, Sir Herbert
Gardner, Edward
James, David


Butler, Rt. Hn. R. A. (Saffron Walden)
George, J. C. (Pollok)
Jenkins, Robert (Dulwich)


Campbell, Sir David (Belfast, S.)
Gibson-Watt, David
Johnson, Dr. Donald (Carlisle)


Campbell, Gordon (Moray &amp; Nairn)
Glover, Sir Douglas
Johnson, Eric (Blackley)


Carr, Compton (Barons Court)
Goodhart, Philip
Johnson Smith, Geoffrey


Carr, Robert (Mitcham)
Goodhew, Victor
Kerans, Cdr. J. S.


Channon, H. P. G.
Gough, Frederick
Kerby, Capt. Henry


Chataway, Christopher
Gower, Raymond
Kerr, Sir Hamilton


Chichester-Clark, R.
Grant, Rt. Hon. William
Kershaw, Anthony


Clark, William (Nottingham, S.)
Green, Alan
Kitson, Timothy


Cleaver, Leonard
Gresham Cooke, R.
Lagden, Godfrey







Lancaster, Col. C. G.
Osborn, John (Hallam)
Stevens, Geoffrey


Langford-Holt, J.
Page, John (Harrow, West)
Steward, Harold (Stockport, S.)


Leather, E. H. C.
Page, Graham (Crosby)
Stodart, J. A.


Leavey, J. A.
Pannell, Norman (Kirkdale)
Stoddart-Scott, Col. Sir Malcolm


Lewis, Kenneth (Rutland)
Partridge, E.
Studholme, Sir Henry


Lilley, F. J. P.
Pearson, Frank (Clitheroe)
Sumner, Donald (Orpington)


Linstead, Sir Hugh
Peyton, John
Tapsell, Peter


Litchfield, Capt. John
Pickthorn, Sir Kenneth
Taylor, Sir Charles (Eastbourne)


Lloyd, Rt. Hon. Selwyn (Wirral)
Pike, Miss Mervyn
Taylor, Edwin (Bolton, E.)


Longbottom, Charles
Pilkington, Sir Richard
Taylor, W. J. (Bradford, N.)


Longden, Gilbert
Pitman, Sir James
Thatcher, Mrs. Margaret


Loveys, Walter H.
Pott, Percivall
Thomas, Leslie (Canterbury)


Lucas, Sir Jocelyn
Price, David (Eastleigh)
Thompson, Kenneth (Walton)


McAdden, Stephen
Prior, J. M. L.
Thornton-Kemsley, Sir Colin


MacArthur, Ian
Prior-Palmer, Brig. Sir Otho
Tiley, Arthur (Bradford, W.)


McLaren, Martin
Profumo, Rt. Hon. John
Turner, Colin


Maclay, Rt. Hon. John
Proudfoot, Wilfred
Turton, Rt. Hon. R. H.


McLean, Neil (Inverness)
Pym, Francis
van Straubenzee, W. R.


MacLeod, John (Ross &amp; Cromarty)
Quennell, Miss J. M.
Vaughan-Morgan, Sir John


Macmillan, Maurice (Halifax)
Ramsden, James
Wakefield, Sir Wavell (St. M'lebone)


Macpherson, Niall (Dumfries)
Rawlinson, Peter
Walder, David


Maddan, Martin
Redmayne, Rt. Hon. Martin
Walker, Peter


Maginnis, John E.
Rees, Hugh
Walker-Smith, Rt. Hon. Sir Derek


Maitland, Sir John
Renton, David
Wall, Patrick


Manningham-Buller, Rt. Hn. Sir R.
Ridley, Hon. Nicholas
Webster, David


Markham, Major Sir Frank
Roberts, Sir Peter (Heeley)
Wells, John (Maidstone)


Marshall, Douglas
Robinson, Sir Roland (Blackpool S.)
Whitelaw, William


Marten, Neil
Roots, William
Williams, Dudley (Exeter)


Matthews, Gordan (Meriden)
Ropner, Col. Sir Leonard
Williams, Paul (Sunderland, S.)


Mawby, Ray
Russell, Ronald
Wills, Sir Gerald (Bridgwater)


Maxwell-Hyslop, R. J.
Scott-Hopkins, James
Wilson, Geoffrey (Truro)


Mills, Stratton
Sharples, Richard
Wise, A. R.


More, Jasper (Ludlow)
Shaw, M.
Wolrige-Gordon, Patrick


Morgan, William
Shepherd, William
Woodhouse, C. M.


Nabarro, Gerald
Skeet, T. H. H.
Woodnutt, Mark


Nicholls, Sir Hamar
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Woollam, John


Nicholson, Sir Godfrey
Smithers, Peter
Worsley, Marcus


Nugent, Sir Richard
Smyth, Brig, Sir John (Norwood)
Yates, William (The Wrekin)


Oakshott, Sir Hendrie
Spearman, Sir Alexander



Orr, Capt. L. P. S.
Speir, Rupert
TELLERS FOR THE NOES:




Mr. Noble and Mr. Peel.

Mr. R. E. Prentice: I beg to move, in page 21, line 6, after "person" to insert:
of eighteen years of age or more".

The Temporary Chairman: I think that it would be convenient to discuss with this Amendment that in page 21, line 18, at the end to insert:
and in any case surcharges shall not be payable in respect of boys under eighteen years of age or girls under eighteen years of age".

Mr. Prentice: Like the previous Amendment, this one is based on our objection to the fact that the tax proposed in the Clause is a blunt instrument and takes no account of the damage that it might do in certain respects. Instead of talking about areas of the country, we are here talking about age groups, and particularly the age group which will leave school this year, next year and the following year. We are very worried about the background to the bulge in school leavers which will be spilling on to the labour market in these three years.
We should have liked to table an Amendment which exempted all young

workers—we think that 21 would have been a better age to put in the Amendment than 18, but we had to insert 18 because of the rules of order—and another dealing with apprentices or those receiving some systematic form of training. This was the nearest we could get to the two ideas, and I think that it covers our point.
This matter was debated fully a fortnight ago, on a Supply day, when we talked about the problems of training in industry with special reference to the bulge. I feel that the Financial Secretary to the Treasury, who is to reply to this Amendment, ought to have done his homework on that day. We could make our case on this Amendment simply by throwing the book at him. I mean that figuratively, not literally.

Mr. Harold Wilson: Why not both?

Mr. Prentice: My right hon. Friend says, "Why not both?". I think that we should wait for the reply before doing that.
Our case has been made for us over and over again. It is made for us every week by the Minister of Labour in the


speeches which he makes in various parts of the country to conferences of employers and trade unionists, asking them to expand their training facilities in the next three years. If the Financial Secretary wants further information on the point, he should look up the Press releases of the Ministry of Labour to see what language his right hon. Friend is employing in urging industry to expand training facilities. Our case was made in Commonwealth Technical Training Week the week before last, by the Duke of Edinburgh, and others, who spoke about the urgency of expanding training facilities.
We have made the basic point under consideration here over and over again. I do not think that it is necessary for me to make it at length again, but let me remind hon. Members opposite that in about six weeks' time nearly 25 per cent. more school leavers will be leaving school than last year. About 110,000 more boys and girls will leave school. Next year, there will be an increase of nearly one-third, and about 170,000 more boys and girls will be leaving school compared with last year. In 1962, the figure will be about the same as this year.
In other words, we are faced with the problem of about 400,000 extra school leavers in a period of three years. We put forward this Amendment because we feel that this tax might damage the prospects of young people, first, in finding jobs, and, secondly, in getting jobs in which there is appenticeship or some other form of systematic training.
We base our case, first, on the needs of the young people as individuals. Every one of them is entitled to the same chance in starting his working life as those who left school in the last few years. If we deny the young people that chance, or do anything to damage it, we are being unfair to them as individuals and perhaps storing up a social cost in terms of the frustration of young people for which the whole of our society will have to pay a price.
As has often been said, this extra number of school leavers presents a tremendous economic opportunity for this country. It has been said over and over again that we are short of skilled workers. We have in a short time a once-for-all and never-to-be-repeated opportunity to

train an extra large number of skilled people in the categories in which this country is short. I had hoped that we might hear from the hon. Member for Mitcham (Mr. R. Carr) on this matter. I saw him in the building quite recently. As hon. Members know, he was Chairman of the Carr Committee which produced a Report On this subject three years ago. It was a disappointing Report in many ways, but it at least stated clearly the economic opportunity presented to this country by the bulge generation. This is, therefore, a matter of tremendous importance both socially and economically.
The Governments of other countries facing difficulties similar to those which we are facing have found it necessary to do something to encourage firms to take on more young people and particularly to offer them training facilities. For example, Holland has found it necessary and advantageous to excuse young people and their employers from national insurance contributions. This was an incentive for employers to take on more young trainees.
France has for many years had a differential training levy which has worked very well. There is a special tax on every firm employing skilled labour and there is a rebate to firms according to the amount of training which they carry out. The firm which does more than its share gets a rebate, the firm which does less than its share is taxed, and the firm that merely does its share breaks even.
In a debate a fortnight ago the Minister of Labour said that some officials of his Department and of the Ministry of Education have recently been to France to study this problem and to see whether a system of the kind applied there should be applied in this country. We are still waiting to hear about the report which the right hon. Gentleman received and the conclusions that he reached from it. Is it not absurd that at the time when the Government are considering whether to introduce something of that kind they come forward with this Measure which is likely to make things worse? I do not think there is any doubt that if this tax goes on the Statute Book without the Amendment that we propose it will make the situation worse.
Informed opinion in all quarters has come to this conclusion. There was a


leader in The Times on the subject. The Institution of Youth Employment Officers unanimously passed a resolution asking that the payroll tax be amended. Everyone who has applied his mind to this tax and considered it in the light of the bulge and the training opportunities of the bulge has come to the conclusion that it may do harm.
It would do harm, not only if it were applied, but merely because of its presence on the Statute Book. An employer, in looking five years ahead and wondering whether to take on more apprentices, will be faced with the fact that at some time during those five years this payroll tax may be applied. He will not know when, for how long or for what amount, but he will know that the possibility of its application exists. That would discourage the employer. It would make all the difference in marginal cases. It would encourage firms that do no training themselves but "poach" their workers from other firms. It would discourage firms thinking of expanding their training facilities during the period when this bulge of young workers is coming on to the labour market.
7.30 p.m.
We have become accustomed over a long period to speaking from this side of the Committee about social and economic problems and condemning the Government for doing nothing about them. In this instance, we condemn the Government for making the problem worse. It is absurd, when some members of the Government are aware of this problem—the Minister of Labour particularly is asking people to do more to help to solve it—that the Chancellor of the Exchequer should cut the ground from under their feet.
The Financial Secretary, at least, is aware of the problem that is presented by the bulge. He was formerly at the Ministry of Education and knows that great efforts have had to be made in the educational world to accommodate the large number of extra school children during their primary and secondary school stages. Anyone who has had anything to do with education will be aware of the problems. This is the type of problem which will face our economy, with all the social and economic consequences if we fail to deal with it properly.
It is scandalous that at this moment, six weeks before those young people comprising this bulge school population start to come on to the labour market, we should be debating whether to impose this extra tax, which would discourage employers from doing what has to be done. I appeal to the Government to accept this Amendment, or to say that at the very least they will never consider imposing this tax on the younger workers, except in very exceptional circumstances. If the Government cannot accept the Amendment, I appeal to hon. Members opposite who have shown an interest in this matter to support us by speeches and votes.

Mr. H. Hynd: In debates on the Finance Bill it is usual for the Government to have something up their sleeve—to give some concession. I am hoping that this is the sort of thing over which the Government will give way. It is a fairly obvious concession which could be made along the lines indicated by my hon. Friend the Member for East Ham, North (Mr. Prentice).
In previous discussions on this subject it has been stated that the payroll tax would not make very much difference to a firm in respect of employees to whom they are paying £10 or £12 a week. But if a firm has to pay an extra 4s. for apprentices who receive a lot less, I suggest that it will make a big difference. Employers will begin to calculate and to consider whether they should take on boys for training, if they are to be faced with this extra surcharge.
I hope the Financial Secretary will keep that point well in mind when considering whether he should make a concession in this matter. The point has been so well put by my hon. Friend that it is not necessary for me to elaborate it. If the Minister has been allowed a little elasticity by the Chancellor, I appeal to him to consider that this is the sort of thing over which he could give way. I appeal to him to say, because of the large number who are about to leave school and come into industry and because of the necessity for training apprentices in industry, that he will not insist on the right to make this surcharge in the case of such people.

Mr. George Darling: I agree that there is not


much which can be added in support of the very well presented and reasoned case advanced by my hon. Friend the Member for East Ham, North (Mr. Prentice). But my hon. Friend presented a general agreement. I should like to apply the argument to a particular case relating to a large group of companies in this country.
I must admit at once that if these Amendments were accepted they would not improve the Clause to any great extent. There would be a slight improvement, but what is really needed is a completely new approach to this question. If we are to have a payroll tax, we must have a discriminating tax so that those firms paying a great deal of attention to the education and training of young workers would derive a financial relief and firms which do nothing for the training of their apprentices and young workers would suffer from the tax. But, for the reasons my hon. Friend has given, we have had to present these Amendments in the way in which they appear on the Notice Paper. Although, as I have said, if these Amendments were carried, they would not make a great deal of difference to the Bill, their acceptance would be a step in the right direction. We need some inducement in a Finance Bill such as this—which, if the regulator is put into effect, will impose a financial burden on industry—to firms to retain and train young workers and to spend a great deal more money on the sort of education and training which we have been discussing.
I should like to give a few figures showing how this tax would work in the case of the United Steel Companies. I have no sanction to speak for this group. I have not asked permission to do so and mention its case only because it operates in and around my constituency and is one of the few concerns in the country which supply both the work-people and the shareholders with a great deal of information about its activities. I am relying on the report, the very full report, of the operations of this group. I am working on the 1960 figures, but I think that the situation is very much the same today.
The United Steel Companies employ, in, round figures, 38,000 workers. Their annual payroll amounts to about £30 mil-

lion, including National Insurance contributions, which works out at an average wage of about £15 a week. From these figures I am convinced that if the purpose of a payroll tax is to make such a group do even more than it is now doing in the way of installing new plant and machinery and saving labour, the imposition of a 4s. tax per worker on the top of the figures which I have mentioned would make no difference whatsoever.
Already the group retains about £11 million a year for investment in new plant, machinery and so on. So that an addition of about £400,000—that is what the 4s. payroll tax would amount to—would not be sufficient to make a great deal of difference. But on top of the wages bill about which I have been talking—this is where we come back to the education and training—the United Steel Companies pay out a tremendous amount of money in the form of fringe benefits, including education and training. So far as I can work out from the figures, the total sum spent on fringe benefits works out on an average at about 7s. a week for each employee. I think my estimate is correct, and I reckon that it spends about 3s. a week on education and training. That is spread over the whole of the employees, it is the average figure, and so the amount spent on the young workers must be very considerable to give an average of 3s. a week for the whole of the 38,000 employees.
It seems to me very unfair that a firm spending money in this way for training and education of its young employees should then be faced with an additional 4s. tax if this so-called economic regulator is put into effect, which would have a bad effect generally over the whole of industry but may have a serious effect in regard to education and training.
If a firm faced with this financial imposition of the payroll tax is not in a position to get rid of labour or quickly to invest in labour-saving machinery and has to find a way of economising in its operations to pay the payroll tax it might look at the money that it spends on education and training as a means of economising. I do not think that reputable firms would make that choice willingly or would put education and training at the top of the list if they had to make economies. I have, however,


been looking through the fringe benefits paid out by the United Steel Companies, and some of them must be contractual payments.
For instance, the companies pay 6s. per week per employee into their own pension scheme. That is a contractual obligation and no economy in that direction is possible. I imagine, too, that sums like 1s. 6d. per head per week for subsidising the works canteen are almost a contractual obligation, because there would be trouble, I should think, if this service was cut off. It is part of the conditions of employment. The companies spend money on safety services, which are tremendously important in the steel industry, and they have overheads for general welfare services, such as rent for sports grounds, and so on. Economies are not likely to be made in this direction, but they might be made in education and training.
Our complaint is not that the firms concerned might go ahead and make these economies, but that under this provision the Government are inducing them to consider making economies in education and training when, as my hon. Friend the Member for East Ham, North has said so forthrightly, everybody who is interested in making our industries more efficient and in getting greater production and prosperity for our country wants more education and training throughout our industrial system.
It is particularly unfair even to consider putting an additional levy, on top of all these voluntary levies, on firms with records of that nature. Of course, the United Steel Companies are not alone in this. Many other reputable firms spend immense sums on education and training—for example, Imperial Chemical Industries, the Coal Board, co-operative societies, and so on—but if they are faced with a problem of making economies to pay this payroll tax, there is an inducement for them at least to consider not expanding their education and training, but making economies in it.
Therefore, weak and ineffective as our Amendments are, to eliminate young workers under the age of 18 from this tax would at least be a step in the right direction. It would not greatly improve the Clause, but at least those firms who

are taking in young workers should be encouraged, particularly having regard to the bulge, to take in more and more young workers and to train them to be skilled workers in our industrial system.
To put up this levy in these circumstances is so utterly stupid that if hon. Members opposite want the record of their Government to stand higher than it is—it is fairly low at the moment—they should agree with us to get rid of this payroll tax altogether. We shall discuss that when we reach the Question "That the Clause stand part of the Bill." At least hon. Members opposite should register their objection to a payroll tax that will have the effect of preventing firms from expanding their expenditure on education and training of young workers at a time in our history when that training and education should be expanded on a very great scale indeed.

7.45 p.m.

Mr. Ede: The speeches by my hon. Friend the Member for East Ham, North (Mr. Prentice) and my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) have brought before the Committee one of the greatest problems of our time and also the greatest opportunity that the country has ever had of being the home of skilled industry spread over a far larger number of people than has ever been the case in the past. The bulge, as it is called, in the schools represents the biggest recruitment to our industries that we have ever had. We should do nothing that would assist a high proportion of these young people, of both sexes, being recruits into blind-alley industries.
Nobody knows the truth of this better than the Financial Secretary, whose service at the Ministry of Education was very distinguished and excited the admiration of both sides among those who look for a wide extension of practical education suitable to the aptitudes of the young people who are in the schools. They are the best-fed generation we have ever had. They have had better opportunities than any previous generation, although their very numbers have militated against their getting the full benefits that those of us who were responsible for the Education Act, 1944, hoped to secure for them. If


we do anything that appears to lessen the responsibility that this generation carries with respect to them, we shall be committing a great sin against succeeding generations.
Those of us who have been interested in the education of youth over a period of years have longed to be able to give these youths the opportunity of getting into occupations in which they can take a pride and in which they will be an essential part of what, we hope, will be be a great industrial future for the country.
The impact of this proposal may be fairly indirect, but, none the less, we ought to make quite certain that we do nothing which will perpetuate some of the problems that confronted us between the two wars and before the First World War in periods of depression when recruitment to skilled industry was often neglected and numbers of youths, of both sexes, of considerable ability, drifted off into occupations in which they never secured full intellectual and social satisfaction to themselves and who, to that extent, lowered the general standard of the country.
I hope that the Government will do nothing that will indicate that they are unaware, not so much of the problem, but of the opportunity that awaits them today and which, in five years' time, may very well have gone if these youths drift into occupations in which no great skill is required, in which no training is given and where, although in these days they may even be able to earn considerable sums of money, they will get no lasting satisfaction from taking part in the industrial life of the country.
I appeal to the Financial Secretary. I know that he is entitled to say to me, "Who are you to preach to me? I do not need to be converted to this kind of thing. I can put the case better than you can." I know that the hon. Gentleman can, but this is one of the tests whether the beliefs which we have fostered during the past twenty years are to dominate the development of industrial life during the next twenty years.

Mr. Donald Wade: I hope that when the Financial Secretary replies he will tell us what are the Government's intentions lying behind

the proviso in subsection (2), which reads:
Provided that different rates of surcharge may be prescribed for different descriptions of persons…
Can we assume from that not only that there may be different rates, but, also, that certain categories of persons may be exempted? After the speeches which have been made already on the Amendment, it is abundantly clear that there is a strong case for exempting young persons and particularly those who are being trained for skilled work.
I do not care very much for this payroll tax, but if it is to be introduced it is essential that the Government should bear in mind the importance of training skilled workers. As boys and girls leave school—and a great many of them will be leaving very soon—the problem is twofold. The first is that of finding employment, and I commend the work of the Ministry of Labour in helping in that respect. The second is that of choosing training and the kind of work which, in the long run, will produce a technician and a skilled worker with a really worthwhile job. There is the temptation to go where the money is best.

Mr. Ede: At first.

Mr. Wade: Yes, at first, but not in the long run and it is very important that everything should be done to encourage apprenticeship schemes and to encourage employers to take apprentices. It would be most unfortunate if any step were taken which would tend to cause employers to reduce the number of their apprentices or to be reluctant to take young people and train them for a skilled job as an indirect consequence of a payroll tax. I hope, therefore, that we shall have some enlightenment on the Government's intentions in this respect.

Mr. H. Wilson: I do not intend to intervene for long in the debate, but I want to ask the Financial Secretary, in the light of the very important and distinguished debate that we have had on this subject, to recognise that there is a special problem here which must be dealt with tonight. We all have our views on the payroll tax and we shall be debating that on the Question "That the Clause stand part of the Bill" before very long and, therefore, it will be out of order to express any views now.
To apply a payroll tax, if that idea were accepted, to young workers, is something which offends the whole Committee. I am sure that the hon. Member for Mitcham (Mr. R. Carr), whom we are glad to see here because of his previous experience in this matter, could not possibly go into the Lobby to support the Government's proposal. I shall look forward to seeing the hon. Member in rather more unusual company on this side of the Committee, because he has produced some distinguished work on this subject.
The payroll tax as a whole is a piece of honest-to-goodness lunacy which we shall be arguing about later, but to apply it to young workers is a piece of inspired lunacy. Figures have been given in this debate and in previous debates, including one a fortnight ago and also a debate in which Alfred Robens opened an important discussion two years ago. Many of us on both sides of the Committee were recently opening exhibitions in our constituencies during the Commonwealth Technical Training Week. If we accept the Clause we shall be hypocrites after all we said when we opened those exhibitions.
I opened an exhibition in a new part of my constituency which has special apprenticeship and training problems, because the birthrate on Merseyside and the number of school leavers have expanded even more than perhaps in any other part of the country. I was speaking in a new town where, I am proud to say, we have nothing but comprehensive schools in which children are encouraged to stay until they are 16 and where there is the special and almost peculiar problem of the 16-year old school leaver which is even more difficult than that of the 15-year old school leaver.
It is an area which, traditionally, has had a bigger problem in the matter of skilled training than the rest of the country. I think that my hon. Friend the Member for East Ham, North (Mr. Prentice), who has studied this subject, will agree that in the country as a whole for every 65 boys and girls who go for jobs with no training or skill 35 receive some skilled training. On Merseyside, the figures are 74 and 26. Only 26 per cent. actually receive training in any skill.
We all recognise that the whole problem is to get industry training-minded

and apprenticeship-minded. I agree with those of my hon. Friends who say that "problem" is the wrong word to use, because this is a gigantic opportunity and one which, as my right hon. Friend the Member for South Shields (Mr. Ede) has said, is a once-and-for-all opportunity. It is certainly a human problem of the lives of millions of people, but it is also a question of our national survival. My right hon. Friend the Member for South Shields said that this is our chance to increase the volume of skill available to the country for the future. We shall never again be the workshop of the world. I do not think that we want to be. We can be the pilot plant of the world, but we shall not be on the kind of proposal which is before us tonight.
I remember debating this matter on a rather "phoney" new Clause which we proposed on a previous Finance Bill. We wanted the problem of apprenticeship to be aired and we put forward a few years ago what I admit was a "phoney" Clause for the purpose of securing special tax concessions for apprenticeship and training. I calculated then that if we had an output of 20 per cent. more skilled men—and no one would say that that was an underestimate compared with what we need at present—it would cost us between £15 million and £20 million.
Against that, what are the Government giving? As a result of the Carr Report on Training for Skill they are giving £75,000 over five years, and even then only on a £ for £ basis, and what the Clause which we are seeking to amend does is to take back in respect of the employment of young workers many times more than the £75,000 which the Government, in their niggardly generosity, had offered to meet this important problem.

Mr. Robert Carr: As for this niggardly sum which the right hon. Gentleman says the Government are giving, the important part of the re-commendations and the opinions expressed in the Report of the Committee of which I had the honour to be chairman was that the main part of the Government's job was to provide technical education to reinforce the recruitment to industry of young workers. If the right hon. Gentleman talks about the money that


the Government are spending he should take into account the extra that they are spending on technical education.

Mr. Wilson: Time has moved on since that Report was issued.
One of my hon. Friends referred to the work of the Institute of Youth Employment Officers. Many of us who have considered this problem since the Carr Report was published would say that that Report did not go far enough. We have had the rather measly and belated offer of training facilities in Government training centres for first-year training and all that kind of thing, but I would be out of order if I pursued that and I do not want to incur your wrath, Sir Gordon, so early in the evening.
8.0 p.m.
The plain fact, as we all recognise, is that some firms are doing a good job. My hon. Friend gave one or two examples. The nationalised industries as a whole are doing a remarkably good job. I do not think that that has been questioned, and some local authorities are working in with them extremely well. The Co-operative movement is also doing a good job in this connection, but there are many firms which are not doing a job at all, and many firms who consider that they do not have to do a job.
Without becoming too argumentative or ideological, I put this point to the hon. Gentleman, because I am sure that he will take this as a fair intellectual point. This is a problem of contemporary capitalism. This is one of the points on which contemporary capitalism is breaking down. If one looks at any firm from the point of view of the actual profit motive, one finds that it has no incentive to train skilled workers, because it says that it will cost money—and it does cost a lot of money to train skilled workers—and at the age of 21 the trained man may be lost to some other firm which has perhaps made no contribution to the problem of training skilled workers; and when every firm has pursued a training programme in accordance with its own concept of its own private profit the sum total of apprentices trained by those firms comes out to a figure a great deal less than the industry as a whole needs.
Capitalism as such cannot solve the problem. Profit-seeking capitalism cannot solve this problem. It can be solved

only when some firms depart from the doctrines of capitalism, as in the instances mentioned by my hon. Friend. Therefore, when all the motives of individual firms tend to push in the opposite direction, because their narrow profit does not push them in the right direction, when many firms are being pushed in the wrong direction except in so far as they are moved by humanitarian or broad national considerations, or considerations of the industry as a whole rather than their own firms, when all the tides are pushing them in the wrong direction, we get the Government, who ought to be asserting some national responsibility, coming along and taxing young workers, juvenile workers, apprentices, and so on.
I do not think that any hon. Member can deny that at the moment this is a marked disincentive. This is a disincentive to the training of apprentices that we were all proclaiming a fortnight ago was so necessary. Ministers at that Box, many of us opening the exhibitions to which I have referred in our constituencies, the whole nation, the whole Commonwealth, were supposed to be mobilised on this important duty, and yet here we have to spend an hour of Parliamentary time trying to persuade the Financial Secretary, who has enough ministerial experience in all the right Departments to teach him what the position should be—and now the Chancellor who has come in—of the necessity to remove this tax, at any rate on young workers.
There will be arguments later showing why the payroll tax idea should be dropped altogether, but it would be out of order to do that now. I wish that the Chancellor had heard the speech of my right hon. Friend the Member for South Shields, the speech of my hon. Friend the Member for East Ham, North, and the speeches of other hon. Members. Had he done so, there would have been no doubt about his reaction to the proposals we have made. I hope that the hon. Gentleman, reinforced by the presence of the Chancellor of the Exchequer, will say, "Yes, this was a mistake. We will drop it, and we will get on with the other parts of the Bill".

The Financial Secretary to the Treasury (Sir Edward Boyle): This has been an exceptionally good debate, and


I am sure that I am speaking for the Committee when I say how much we welcomed the contribution of the right hon. Member for South Shields (Mr. Ede). I return the compliment that he was kind enough to pay me by saying that if I happen to be a Member of the House when I reach his age, I hope that in speaking on this kind of subject I will do so with half the vigour and clarity which he showed this evening.
It fell to me to wind up the debate which Alfred Robens opened rather more than two and a half years ago, and perhaps I shall escape having that book thrown at me if I tell the hon. Member for East Ham, North (Mr. Prentice), whose speech I greatly enjoyed, that I did not read the whole of the debate the other week, but I read most of it.
I understand that the hon. Member for East Ham would have preferred to move an Amendment, had it been possible within the rules of order and the terms of the Budget Resolutions, which covered a wider ambit than this. He would have liked to exempt apprentices as such from the employers' surcharge, and, as he said, he would have liked to have been able to exempt all those under 21. But, considering the speeches which have been made, I do not know whether I would wish to go quite as far as some hon. Members have.
I think that one can exaggerate the disincentive effect which the presence of this Clause in the Statute Book might have on employers taking on apprentices, and I was a little surprised by what the right hon. Member for Huyton (Mr. H. Wilson) said about companies giving fringe benefits going wrong on the principles of capitalism, because not only in this country, but on the other side of the Atlantic, too, there has been a great change in recent decades. As our society has become more and more managerial there has been a greatly increased tendency for companies to give fringe benefits of this kind. I thought that I detected a whiff of "Clause 4 and all that" about that part of the night hon. Gentleman's speech.

Mr. H. Wilson: The hon. Gentleman is wrong. I made it quite plain that many firms are doing this, but for national considerations, not for considerations of profit-seeking capitalism. This is one of the classic cases where

the interests of the individual and industry are still in conflict. Not many are doing it for the sake of the individual, or for the sake of the nation, or for managerial reasons. Basically, if one applies a profit test, the interests of the firm and of industry tend to be in conflict.

Sir E. Boyle: I will not pursue that point, but I could not resist saying what I did.
I agree with hon. Gentlemen opposite who have said that in the years ahead we shall have not only a problem, but an opportunity such as we are not likely to have again. I agree, and my right hon. and learned Friend fully accepts this, that if this surcharge comes to be imposed there will be a strong case for special treatment for boys and girls under 18. My right hon. and learned Friend and I cannot tonight enter into a firm commitment to provide total or partial relief for boys and girls under 18, but what I can say to the Committee is that if my right hon. and learned Friend decides that this surcharge is to be imposed he will keep in mind the arguments which have been advanced tonight by hon. Members, and by many other people outside, for some relief in respect of young people.
I cannot go further than that now except to say again that my right hon. and learned Friend fully realises the very important economic and human implications of this whole subject, and that he hopes that the Committee will derive some comfort, at any rate, from what I have said.

Mr. Prentice: The Financial Secretary's reply is very disappointing. It is not satisfactory for him to say that the Chancellor will take these matters into account. Nothing is good enough at this stage except a clear pronouncement by the Government that this will not be imposed on workers under 18 at least during the period when the bulge is leaving school and during the years ahead when some of that generation will be serving their apprenticeships, and so on.
The Financial Secretary's speech was in keeping with the speeches we heard from that bench during the debate a fortnight ago, when the whole subject was approached much too casually. There is no sense of urgency on this


matter by the Government, and this is an urgent matter. This extra large generation will start leaving school in about six weeks. Employers throughout the country have been asked by the Industrial Training Council to expand their training facilities by at least a fifth to meet this situation. There is no evidence that the majority of employers are meeting that request. A few have done so but, generally, the few that have are those who have already demonstrated that they are good employers, with better training facilities than the average.
I do not want to be alarmist about this, but all the evidence tends to show that industry will fail to meet the challenge and opportunity of the bulge. If we had had something more definite from the Government tonight, even on this comparatively narrow point, it would have been a sign that they took this matter seriously and meant business. As it is, the speeches that the Minister of Labour is making throughout the country—and, as they stand, they are good speeches—will not be backed up by any kind of action.
Will the Financial Secretary or the Chancellor rise even now and make a more definite pronouncement? If not, we shall go into the Division Lobby, and we hope to be able to take with us those hon. Members opposite who feel strongly about this matter.

Mr. H. Hynd: I must press the Chancellor a little further on this. The Financial Secretary has admitted that the Amendment is justified, in principle. The Clause says:
Provided that different rates of surcharge may be prescribed for different descriptions of persons, and if it is so prescribed surcharges shall not be payable in respect of a prescribed description of persons.
Having admitted the principle, will not the Financial Secretary or the Chancellor go just that little bit further and agree that the people we have been talking about—boys and girls under 18 years of age—will be just the people in respect of whom surcharges shall not be payable, as provided in the Clause?
If either of them will say that, without accepting the Amendment, it will meet our case, and it will be in line with what the Financial Secretary has already said.

8.15 p.m.

Mr. H. Wilson: Are we not to have a reply from the Government Front Bench? The Financial Secretary's brief speech left the situation worse than before. He talked as if he were giving a concession. If we did not know both he and the Chancellor to be estimable characters we would say that this was a piece of cool cheek on the part of the hon. Gentleman. It is the House of Commons which decides taxation matters, and it is impertinent for the Financial Secretary to say that this has been a good debate, that he has listened to it, and that his right hon. and learned Friend, at the end of the day, will consider the points that have been raised and decide how much tax to apply. The House of Commons has the responsibility in taxation matters, and must determine the conditions on which the tax should operate.
My right hon. Friend the Member for South Shields (Mr. Ede) and other hon. Members have put forward powerful reasons why, without leaving anything to cancellarian discretion, there should be no taxation of young workers, whatever is done about other workers. It is not good enough for the hon. Gentleman merely to say that the Chancellor will give due consideration to the point. On constitutional grounds, apart from the other arguments put forward by my right hon. and hon. Friends and myself, the Financial Secretary or the Chancellor should say, "We accept the argument that has been put forward," either by incorporating the Amendment in the Bill or by giving a clear pledge that if the payroll tax is introduced no tax will be imposed in respect of young workers.
If either of them will do that we will be satisfied; if not, we must challenge, in the Division Lobby, the sincerity of hon. Members opposite who have spoken on the matter, including the Minister of Labour, who is lurking in the place normally occupied by the Home Secretary in late night sittings, when he is not here, or when he comes along and says that he is not here.
The Minister of Labour made some speeches about this subject a fortnight ago. We shall test his sincerity in the Lobby. It is up to the Financial Secretary. He should not leave it to the Chancellor's discretion. That is not good enough in this case.

Sir E. Boyle: I cannot go beyond my previous remarks. So that there shall not be any question of bad faith, I can say frankly that the Government do not feel able to accept the Amendment. The Clause as now drawn—and hon. Members, including the hon. Member for Huddersfield, West (Mr. Wade), have drawn attention to this—enables the Chancellor, if a surcharge is imposed, to grant either total or partial relief.

Mr. H. Hynd: I represent Accrington.

Sir E. Boyle: The hon. Member for Huddersfield, West and the hon. Member for Accrington (Mr. H. Hynd), more recently, made the same point. If a surcharge were to be imposed my right hon. and learned Friend could give total or partial relief for particular categories of people in respect of whom contributions are paid. I have said that he will bear in mind the arguments put forward this evening. I cannot go beyond that. I recognise the strong feeling of hon. Members and, as I have said, their arguments will be very much in my right hon. and learned Friend's mind. Nevertheless, I cannot advise the Committee to accept the Amendment.

Mr. Wade: I understand that the Financial Secretary is not able to give the Committee any assurance. He is merely indicating that the power is there. We have no assurance that it will be used in this way.

Mr. Glenvil Hall: My right hon. Friend the Member for Huyton (Mr. H. Wilson) made a very strong case for the Committee's dealing with this and not leaving it to the Government. The Financial Secretary talked as though the Chancellor would hold his present office for all time.
If this power is to be implemented within the next few weeks or months

there may be something to be said for the implicit promise given by the Financial Secretary on behalf of the Chancellor—I will not enlarge upon the fact that the Chancellor is sitting on the Front Bench, and could have given the promise himself if he had been so minded—but the promise extended only to the present Chancellor. Debates here have a habit of being forgotten, and even promises made by some Governments and Ministers are completely forgotten almost as soon as they are uttered.

The fact is that what the Financial Secretary has said is worth absolutely nothing. Therefore, my hon. and right hon. Friends—and, I hope some hon. Friends opposite who regard this as a most important matter—will vote against the Government. A fortnight or so ago we had a long, detailed and interesting discussion on the need for technical education and the training of apprentices. Both sides of the House came together in a most remarkable way. All that has apparently gone for nothing. All that we have got is an airy statement by the Financial Secretary—who, according to newspaper accounts, may himself not be in his present post for very much longer—to the effect that his right hon. and learned Friend will take all these points into account. He will not make any promises.

That statement is not worth anything to the Committee, and hon. Members on this side—if hon. Members opposite who share our view have not the guts to do so—will, at any rate, demonstrate what we feel by voting in the Lobby.

Question put, That those words be there inserted:—

The Committee divided: Ayes 183, Noes 240.

Division No. 197.]
AYES
[8.18 p.m.


Alnsley, William
Chapman, Donald
Diamond, John


Albu, Austen
Cliffe, Michael
Dodds, Norman


Allaun, Frank (Salford, E.)
Corbet, Mrs. Freda
Donnelly, Desmond


Awbery, Stan
Craddock, George (Bradford, S.)
Driberg, Tom


Bacon, Miss Alice
Cronin, John
Ede, Rt. Hon. C.


Baxter, William (Stirlingshire, W.)
Crosland, Anthony
Edelman, Maurice


Benson, Sir George
Crossman, R. H. S.
Edwards, Rt. Hon. Ness (Caerphilly)


Blyton, William
Cullen, Mrs. Alice
Edwards, Walter (Stepney)


Bowden, Herbert W. (Leics, S. W.)
Darling, George
Fernyhough, E.


Boyden, James
Davies, C. Elfed (Rhondda, E.)
Finch, Harold


Braddock, Mrs. E. M.
Davies, Harold (Leek)
Fitch, Alan


Brockway, A. Fenner
Davies, S. O. (Merthyr)
Foot, Michael (Ebbw Vale)


Brown, Rt. Hon. George (Belper)
Deer, George
Forman, J. C.


Butler, Herbert (Hackney, C.)
de Freltas, Geoffrey
Fraser, Thomas (Hamilton)


Callaghan, James
Delargy, Hugh
Galpern, Sir Myer




George, Lady Megan Lloyd (Crmrthn)
Loughlin, Charles
Short, Edward


Ginsburg, David
Mabon, Dr. J. Dickson
Silverman, Julius (Aston)


Gooch, E. G.
McCann, John
Skeffington, Arthur


Gordon Walker, Rt. Hon. P. C.
McInnes, James
Slater, Mrs. Harriet (Stoke, N.)


Gourlay, Harry
McKay, John (Wallsend)
Slater, Joseph (Sedgefield)


Grey, Charles
Mackie, John (Enfield, East)
Small, William


Griffiths, Rt. Hon. James (Llanelly)
McLeavy, Frank
Smith, Ellis (Stoke. S.)


Griffiths, W. (Exchange)
MacMillan, Malcolm (Western Isles)
Snow, Julian


Gunter, Ray
MacPherson, Malcolm (Stirling)
Sorensen, R. W.


Hale, Leslie (Oldham, W.)
Mahon, Simon
Soskice, Rt. Hon. Sir Frank


Hall, Rt. Hn. Glenvil (Colna Valley)
Mallalieu, J. P. W. (Huddersfield, E.)
Spriggs, Leslie


Hamilton, William (West Fife)
Manuel, A. C.
Steele, Thomas


Hannan, William
Mapp, Charles
Stewart, Michael (Fulham)


Hart, Mrs. Judith
Marquand, Rt. Hon. H. A.
Stonehouse, John


Hayman, F. H.
Marsh, Richard
Stones, William


Henderson, Rt. Hn. Arthur (Rwly Regis)
Mason, Roy
Stross, Dr. Barnett (Stoke-on-Trervt, C.)


Herbison, Miss Margaret
Mendelson, J. J.
Swingler, Stephen


Hill, J. (Midlothian)
Millan, Bruce
Sylvester, George


Holman, Percy
Milne, Edward J.
Symonds, J. B.


Howell, Charles A. (Perry Barr)
Mitchison, G. R.
Taylor, Bernard (Mansfield)


Hoy, James H.
Monslow, Walter
Taylor, John (West Lothian)


Hughes, Cledwyn (Anglesey)
Moody, A. S.
Thomas, Iorwerth (Rhondda, W.)


Hughes, Emrys (S. Ayrshire)
Mort, D. L.
Thompson, Dr. Alan (Dunfermline)


Hunter, A. E.
Moyle, Arthur
Thomson, G. M. (Dundee, E.)


Hynd, H. (Accrington)
Neal, Harold
Thornton, Ernest


Hynd, John (Attercilffe)
Noel-Baker, Francis (Swindon)
Timmons, John


Irving, Sydney (Dartford)
Oswald, Thomas
Tommy, Frank


Janner, Sir Barnett
Padley, W. E.
Wade, Donald


Jay, Rt. Hon. Douglas
Pannell, Charles (Leeds, W.)
Wainwright, Edwin


Jager, George
Parkin, B. T.
Warbey, William


Johnson, Carol (Lewisham, S.)
Pavitt, Laurence
Watkins, Tudor


Jones, Rt. Hn. A. Creech (Wakefield)
Pearson, Arthur (Pontypridd)
Wells, William (Walsall, N.)


Jones, Dan (Burnley)
Peart, Frederick
Whitlook, William


Jones, Elwyn (West Ham, S.)
Popplewell, Ernest
Wilkins, W. A.


Jones, J. Idwal (Wrexham)
Prentice, R. E.
Willey, Frederick


Jones, T. W. (Merioneth)
Price, J. T. (Westhoughton)
Williams, D. J. (Neath)


Kenyon, Clifford
Probert, Arthur
Williams, Ll. (Abertillery)


Key, Rt. Hon. C. W.
Proctor, W. T.
Willis, E. G. (Edinburgh, E.)


King, Dr. Horace
Pursey, Cmdr. Harry
Wilson, Rt. Hon. Harold (Huyton)


Lawson, George
Randall, Harry
Winterbottom, R. E.


Ledger, Ron
Reid, William
Woodburn, Rt. Hon. A.


Lee, Frederick (Newton)
Roberts, Albert (Normanton)
Woof, Robert


Lee, Miss Jennie (Cannock)
Roberts, Goronwy (Caernarvon)
Yates, Victor (Ladywood)


Lever, Harold (Cheetham)
Robertson, John (Paisley)



Lever, L. M. (Ardwick)
Rogers, G. H. R. (Kensington, N.)
TELLERS FOR THE AYES:


Lewis, Arthur (West Ham, N.)
Ross, William
Dr. Broughton and Mr. Ifor Davies.


Lipton, Marcus
Royle, Charles (Salford, West)



Logan, David






NOES


Agnew, Sir Peter
Channon, H. P. G.
Gibson-Watt, David


Aitken, W. T.
Chataway, Christopher
Glover, Sir Douglas


Allason, James
Chichester-Clark, R.
Glyn, Dr. Alan (Clapham)


Arbuthnot, John
Clark, William (Nottingham, S.)
Goodhart, Philip


Ashton, Sir Hubert
Cleaver, Leonard
Goodhew, Victor


Barber, Anthony
Cole, Norman
Gower, Raymond


Barlow, Sir John
Cooke, Robert
Grant, Rt. Hon. William


Barter, John
Cooper-Key, Sir Neill
Grant-Ferris, Wg Cdr. R.


Baxter, Sir Beverley (Southgate)
Cordeaux, Lt.-Col. J. K.
Green, Alan


Bell, Ronald
Corfield, F. V.
Gresham Cooke, R.


Bennett, F. M. (Torquay)
Coulson, J. M.
Grimsten, Sir Robert


Bennett, Dr. Reginald (Gos &amp; Fhm)
Courtney, Cdr. Anthony
Grosvenor, Lt.-Col. R. G.


Berkeley, Humphry
Craddock, Sir Beresford
Gurden, Harold


Bidgood, John C.
Crosthwaite-Eyre, Col. Sir Oliver
Hamilton, Michael, (Wellingborough)


Biggs-Davison, John
Cunningham, Knox
Hare, Rt. Hon. John


Birch, Rt. Hon. Nigel
Curran, Charles
Harris, Frederic (Croydon, N. W.)


Bishop, F. P.
Currie, G. B. H.
Harrison, Brian (Malden)


Bourne-Arton, A.
d'Avigdor-Goldsmid, Sir Henry
Harrison, Col. Sir Harwood (Eye)


Box, Donald
Deedes, W. F.
Harvie Anderson, Miss


Boyle, Sir Edward
de Ferranti, Basil
Heald, Rt. Hon. Sir Lionel


Braine, Bernard
Digby, Simon Wingfield
Henderson, John (Cathcart)


Brewis, John
Duncan, Sir James
Henderson-Stewart, Sir James


Bromley-Davenport, Lt-Col. Sir Walter
Duthie, Sir William
Hendry, Forbes


Brown, Alan (Tottenham)
Eden, John
Hiley, Joseph


Browne, Percy (Torrington)
Elliot, Capt. Walter (Carshalton)
Hill, Dr. At. Hon. Charles (Luton)


Buck, Antony
Elliott, R. W. (Nwastle-upon-Trne, N.)
Hill, Mrs. Eveline (Wythenshawe)


Bullard, Denys
Emery, Peter
Hill, J. E. B. (S. Norfolk)


Bullus, Wing Commander Eric
Errington, Sir Eric
Hirst, Geoffrey


Burden, F. A.
Farr, John
Hocking, Philip N.


Butcher, Sir Herbert
Finlay, Graeme
Hollingworth, John


Butler, Rt. Hn. R. A. (Saffron Walden)
Fraser, Hn. Hugh (Stafford &amp; Stone)
Hopkins, Alan


Campbell, Sir David (Belfast, S.)
Fraser, Ian (Plymouth, Sutton)
Hornby, R. P.


Carr, Compton (Barons Court)
Gammans, Lady
Howard, John (Southampton, Test)


Carr, Robert (Mitcham)
Gardner, Edward
Hughes-Young, Michael




Hulbert, Sir Norman







Hurd, Sir Anthony
Montgomery, Fergus
Spearman, Sir Alexander


Hutchison, Michael Clark
Moro, Jasper (Ludlow)
Speir, Rupert


Iremonger, T. L.
Morgan, William
Stevens, Geoffrey


James, David
Nabarro, Gerald
Steward, Harold (Stockport, S.)


Jenkins, Robert (Dulwich)
Nicholls, Sir Harmer
Stodart, J. A.


Johnson, Dr. Donald (Carlisle)
Nicholson, Sir Godfrey
Stoddart-Scott, Col. Sir Malcolm


Johnson, Eric (Blackley)
Noble, Michael
Studholme, Sir Henry


Johnson Smith, Geoffrey
Nugent, Sir Richard
Sumner, Donald (Orpington)


Jones, Rt. Hn. Aubrey (Hall Green)
Oakshott, Sir Hendrie
Talbot, John E.


Kerans, Cdr. J. S.
Orr, Capt. L. P. S.
Tapsell, Peter


Kerby, Capt. Henry
Osborn, John (Hallam)
Taylor, Sir Charles (Eastbourne)


Kerr, Sir Hamilton
Osborne, Sir Cyril (Louth)
Taylor, Edwin (Bolton, E.)


Kitson, Timothy
Page, John (Harrow, West)
Taylor, W. J. (Bradford, N.)


Lagden, Godfrey
Page, Graham (Crosby)
Temple, John M.


Lambton, Viscount
Pannell, Norman (Kirkdale)
Thatcher, Mrs. Margaret


Langford-Holt, J.
Partridge, E.
Thomas, Leslie (Canterbury)


Leather, E. H. C.
Pearson, Frank (Clitheroe)
Thompson, Kenneth (Walton)


Leavey, J. A.
Peel, John
Thornton-Kemsley, Sir Colin


Lewis, Kenneth (Rutland)
Peyton, John
Tiley, Arthur (Bradford, W.)


Linatead, Sir Hugh
Pickthorn, Sir Kenneth
Turner, Colin


Litchfield, Capt. John
Pike, Miss Mervyn
Turton, Rt. Hon. R. H.


Lloyd, Rt. Hon. Selwyn (Wirral)
Pilkington, Sir Richard
van Straubenzee, W. R.


Longbottom, Charles
Pitman, Sir James
Vosper, Rt. Hon. Dennis


Longden, Gilbert
Pott, Percivall
Wakefield, Sir Wavell (St. M'lebone)


Loveys, Walter H.
Price, David (Eastleigh)
Walder, David


Lucas, Sir Jocelyn
Prior, J. M. L.
Walker, Peter


McAdden, Stephen
Prior-Palmer, Brig Sir Otho
Walker-Smith, Rt. Hon. Sir Derek


MacArthur, Ian
Proudfoot, Wilfred
Wall, Patrick


McLaren, Martin
Pym, Francis
Ward, Dame Irene


Maclay, Rt. Hon. John
Quennell, Miss J. M.
Webster, David


McLean, Neil (Inverness)
Ramsden, James
Wells, John (Maidstone)


MacLeod, John (Ross &amp; Cromarty)
Redmayne, Rt. Hon. Martin
Whitelaw, William


Macmillan, R. Hn. Harold (Bromley)
Rees, Hugh
Williams, Dudley (Exeter)


Macmillan, Maurice (Halifax)
Rees-Davies, W. R.
Wills, Sir Gerald (Bridgwater)


Macpherson, Niall (Dumfries)
Renton, David
Wilson, Geoffrey (Truro)


Maddan, Martin
Ridley, Hon. Nicholas
Wise, A. R.


Maginnis, John E.
Roberts, Sir Peter (Heeley)
Wolrige-Gordon, Patrick


Maitland, Sir John
Robinson, Sir Roland (Blackpool, S.)
Woodhouse, C. M.


Manningham-Buller, Rt. Hn. Sir R.
Roots, William
Woodnutt, Mark


Markham, Major Sir Frank
Ropner, Col. Sir Leonard
Woollam, John


Marlowe, Anthony
Russell, Ronald
Worsley, Marcus


Marples, Rt. Hon. Ernest
Scott-Hopkins, James
Yates, William (The Wrekin)


Marshall, Douglas
Shaw, M.



Marten, Neil
Shepherd, William
TELLERS FOR THE NOES:


Matthews, Gordon (Meriden)
Skeet, T. H. H.
Mr. Edward Wakefield and


Mawby, Ray
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Mr. Gordon Campbell.


Maxwell-Hyslop, R. J.
Smithers, Peter



Mills, Stratton

8.30 p.m.

Mr. McMaster: I beg to move, in page 21, to leave out lines 10 to 12.
This Amendment in the names of my hon. Friends the Members for Belfast, West (Mrs. McLaughlin), Mid-Ulster (Mr. Forrest) and myself is on a matter which has given a great deal of concern to those of us who represent Northern Ireland in this Parliament.
Clause 26 of the Finance Bill states:
If, during the period beginning with the passing of this Act and ending with the thirty-first day of March, nineteen hundred and sixty-two it appears to the Treasury that it is expedient so to do with a view to regulating the balance between demand and resources in the United Kingdom, the Treasury may by order direct that the following subsection shall have effect…
As stated in the Clause, its purpose is to regulate the balance "between demand and resources in the United Kingdom." This has been described during the debate on the Budget, and later during the Second Reading of the Finance Bill, as a payroll tax.
The first point I made is that it is not actually a tax; it is a surcharge, and it is so described in the Bill. It is something which is meant to regulate the economy. It has been suggested that this regulator may never be applied. That suggestion is not supported by the leading financial columnists and writers in our newspapers today. Within the past fortnight in a leading article in The Times, another article in the Financial Times and an article by the financal editor in The Times, it was suggested that the regulators are necessary and should be used.
It has also been suggested that because of the balance of payments crisis which may well develop in the autumn with the present trend of the growth in the economy of this country, these regulators should be used, and used promptly, by the Chancellor. I stress that the purpose of this Amendment is not in any way to kill Clause 26. I think


the regulators are probably necessary in order to preserve the balance of payments and to preserve sterling.
However, we have put down this Amendment because we are afraid that through causes beyond the control of the Chancellor he may well be faced with a situation in which he has to use these regulators. I am taking the situation at its worst. If the worst comes to the worst the payroll regulator will be invoked. The Chancellor made it quite clear during the Budget debate and put it on record in his speech on the first day of the Budget debate, 17th April, from which I shall quote two brief passages. The first was:
My second proposal relates to a special surcharge on employers, analogous to a payroll tax. The use of such a measure as an economic regulator would have the added advantage that when we are faced with a situation of chronic shortage of labour it would act as an incentive to economy in the use of manpower and to investment in labour-saving equipment. I propose to ask for power this year as a temporary expedient to collect such a surcharge, should it be needed, by attaching it to the employers' share of the National Insurance stamp.
I draw attention, as was drawn in discussion of the other Amendments, to these purposes. I pick out as the key words, "chronic shortage of labour". The situation of a chronic shortage of labour does not apply in Northern Ireland. The Chancellor said:
These two new fiscal powers, which could, of course, be used either together or separately will, in my view, greatly improve the Government's ability to regulate the economy; we shall be much better able to act by quick and flexible fiscal means, in the interval between this and the next Budget."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 808–9.]
In the Chancellor's own words during the Budget debate, it appears that if a chronic situation arises he intends to use the payroll tax. As I have said, he has been urged to do so by the leader writer of the Financial Times. I also quote from the speech of my right hon. Friend the President of the Board of Trade on the second day of the Budget debate. On 18th April, he said with respect to the payroll regulator:
The right hon. Gentleman keeps asking for more investment. Surely he would agree that to regulate demand in the economy my right hon. and learned Friend was right to take two measures. The first, that concerning indirect taxation, will bear directly on consumption, and the second, the payroll tax, is

designed to encourage investment in laboursaving machinery. I should have thought that that was entirely in accordance with the arguments which have been pressed on us by hon. Members opposite.
It was stated clearly that the payroll tax is meant to economise in labour.
Later in the debate the President of the Board of Trade said:
The argument for the payroll tax, which I think is a very good one, is that we in this country must recognise that labour is our scarcest commodity. We must encourage industry to develop in such a way that the maximum output comes from every man, and that means that we must have the maximum capital equipment behind every man."—[OFFICIAL REPORT, 18th April, 1961; Vol. 638, c. 1006–7.]
This is something with which the Ulster Unionist Members in general principle do not quarrel, but I ask the Chancellor very seriously to think of the special conditions in Northern Ireland. Do we in Northern Ireland want to encourage industrialists, where they have art equal choice, to invest in expensive labour-saving equipment and to cut down their labour force when we already have 7½ per cent. unemployed? I should like to quote briefly from a speech by my hon. Friend the Economic Secretary to the Treasury who said, on 19th April:
My right hon and teamed Friend has therefore proposed two changes to improve this situation.
He had referred to the Radcliffe Committee's proposals with respect to regulating the economy. He continued:
The Committee already knows the details of these proposals, and my right hon. Friend the President of the Board of Trade spent some time examining them yesterday. I want to make only four brief points about them.
First, whatever views hon. Members may have on the merits of these two proposals it is undeniable that they will go a long way to remedy the difficulties which I have mentioned and to make possible a more rapid and flexible adjustment of economic policy to deal with varying economic conditions.
The second point concerns the application of the employer surcharge to Northern Ireland. As hon. Members will have observed from the Financial Statement, the surcharge, if imposed, would apply to Northern Ireland employers. In Northern Ireland, the National Insurance scheme is operated on exactly the same basis as in Great Britain. This is essential if the free mobility of labour between the two parts of the United Kingdom is to be preserved, and my right hon. and learned Friend has been concerned to see that his new proposals do nothing to upset this. But hon. Members will also have seen from the Financial Statement that the proceeds of any surcharge deriving


from employers in Northern Ireland will be paid not into the United Kingdom Exchequer, but directly to the Northern Ireland Exchequer."—[OFFICIAL REPORT, 19th April, 1961; Vol. 638, c. 1184.]
It appears from this statement that the main objection to exempting Northern Ireland from the payroll tax is one of administrative difficulty. I suggest most seriously, in support of my Amendment, that the Chancellor should consider whether the administrative difficulty is greater than the difficulty which would be faced by those of us who live in Northern Ireland if this charge were applied.
My right hon. and learned Friend has hinted tonight that if this charge were applied in Northern Ireland it would be repaid to those firms concerned. I ask him whether it would not be much wiser administratively, rather than waste the taxpayers' money in collecting money to be returned, to exempt Northern Ireland. Would he consider whether it is possible to use differently coloured stamps or something like that? This surcharge, which is to be applied for this year through the National Insurance Scheme, does not form part of that scheme. Is it not possible to devise a scheme whereby differently coloured stamps were used in Northern Ireland? The basic National Insurance payment is now over £1 per man. Could these stamps be attached to the National Insurance cards of those working in Northern Ireland?

Mr. Ellis Smith: I have listened to the hon. Member with great sympathy because I know conditions in Northern Ireland. Will he accept my interpretation of his speech when I say that he is asking for preferential treatment for Northern Ireland because of the economic conditions which exist? I have sympathy with him, but if it were extended to Northern Ireland at this stage, then, if similar conditions occurred in other parts of Britain, it would have to be applied there, too.

Mrs. Patricia McLaughlin: It is being made into a guinea pig.

Mr. McMaster: The hon. Gentleman opposite has anticipated part of my argument. If he will forgive me, I

should like to continue this part of my argument and deal with that point in a few minutes.
I should like to quote again very briefly, for I think that this is most relevant, though I apologise to the Committee for the time I am taking. [An HON. MEMBER: "There is no need to apologise."] On 20th April my hon. Friend the Financial Secretary to the Treasury stated in response to an intervention of mine:
My hon. Friend has precisely anticipated my very next sentence. I was about to mention Northern Ireland. I know that, because a surcharge of this kind has to apply equally to all areas of Great Britain and Northern Ireland, certain hon. Members, including some of my hon. Friends, have expressed fears that it might have an adverse effect on places with local employment problems. But when one considers that the surcharge at its maximum rate would add to the cost of employing each man only £10 a year, I simply do not believe that a surcharge at that level could materially affect problems of local employment or—and this is the point—nullify the positive measures which the Government are taking to solve local employment problems."—[OFFICIAL REPORT, 20th April, 1961; Vol. 638, c. 1417.]
I have very great respect for the judgment of my hon. Friend the Financial Secretary, but here I would like to take issue with him. I think, from my knowledge and experience in Northern Ireland, that a payroll tax of even just 4s. a head and approximately £10 per annum would have a very serious effect on employment in Ulster. There is much marginal industry in Ulster. Many industries have high transport costs, which Dr. Beeching announced only last night may have to be further increased. They can barely compete with other industries in the United Kingdom as in the export trade unless they are exempted from this tax. I think of industries in my own constituency, the shipbuilding yards, the aircraft industry, the rope works.
It may well be argued that this money will be returned to certain manufacturing industries, but I ask my hon. Friend to consider whether that is sufficient, if the money is to be collected this year. For Harland and Wolff with their shipyards it would cost approximately £250,000 for one year. If it were collected this year, to be returned next year, without any interest paid on it, and probably with administrative costs of collecting or returning it, those costs


would have to be borne by the Exchequer, have to be borne by the tax-payers of this country. I submit that that is totally unnecessary.
I quote now a passage from a speech of the Chancellor of the Exchequer at the end of the debate on the Budget, when he said:
"Hon. Members on both sides of the Committee have referred particularly to the second regulator and have stressed its disadvantages. They have spoken about its effect in areas of local unemployment. One hon. Member spoke of the damage it will do in a time of recession. There can be no question of using any regulator at a time of recession. If it were used at all it would be used at a time of high boom in Britain, when there was such a pressure of demand at home that imports were being sucked in and resources taken away from exports. I want these weapons to deal with that sort of situation."—[OFFICIAL REPORT, 20th April, 1961; Vol. 638, c. 1514–5.]
I should like to ask my right hon. and learned Friend what he means by a recession. He has already been asked in this debate today what he means by a boom. Would he count twice the level of unemployment we have in Great Britain today as a recession? Twice the level would be about 3 per cent. We in Northern Ireland, in any event, have double even that, 7½ per cent. Is that recession or boom? If it is not to be applied in time of recession in Britain, why should it be applied in a time of acute recession in Northern Ireland? Because that is the situation from which we are suffering today in Northern Ireland.
8.45 p.m.
I speak of a constituency which I know very well. I have gone round this constituency and I have been in many of the houses and homes. They are poor houses and poor homes. The workmen bring in wages of £7 or £8 a week, and they are lucky to get work to enable them to take that money home. It is different from the situation in the Midlands and in the south of England where the wages are a great deal higher. There is in the south of England—I say this with respect to hon. Members and without any intention of being offensive—an air of prosperity. There is no air of prosperity in Belfast. There is heavy unemployment which has risen in the past year to 10 per cent. One man in every ten is now out of work.
A friend in my constituency told me that he put an advertisement in the local

paper for a young man to come into his factory as an apprentice to learn the job at a low wage. He was surprised when he got fifty or sixty replies to that small advertisement. Men were queuing up to see him in the morning. Would that be the effect of such an advertisement in this country? An employer would be lucky to get one person at the wages my friend was offering.

Mr. H. Wilson: In view of the hon. Gentleman's reference to apprentices, will he say how he voted on the Amendment to exempt apprentices from this tax?

Mr. McMaster: I abstained from voting on that Amendment.
I should also like to quote some remarks of my right hon. and learned Friend the Chancellor of the Exchequer on the Second Reading of the Finance Bill. Referring to the payroll tax, he said:
The second instrument, the employer surcharge, has caused more controversy than any other of my proposals. There are considerable disadvantages and advantages about this surcharge. I have tried to be frank with the House about both. Lt will be possible to deal with the position of different categories of contributors in different ways. I refer to juveniles, women, or retired people. It will not be possible—I say this quite openly to the House—under the method proposed to differentiate between areas. In the special case of Northern Ireland, there is, of course, a difference there in that there is a separate Insurance Fund into which insurance contributions are paid and a separate Exchequer which will receive the proceeds of the surcharge. So the surcharge, if imposed, will be collected and retained by the Northern Ireland Government, and there is no limit upon their discretion to use the proceeds as they think fit."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1632–3.]
I should like to make it quite clear that we in Northern Ireland are most grateful for the concessions which have been granted by my right hon. and learned Friend and to which reference was made by the Financial Secretary at the end of the Second Reading debate. We do not want to appear in any way churlish or ungrateful. However, after serious consideration I have put down this Amendment to see whether it would be possible for my right hon. and learned Friend to go further, to go the whole hog and to exempt Northern Ireland completely from the effects of this payroll tax. I do so not only because of the lower level of wages in Northern Ireland but because of the


heavy unemployment there. The percentage of unemployment, according to the most recent figures, is still rising, while the level in the rest of the United Kingdom is falling. I ask for this concession this year and not next year.
We have a very peculiar situation in Ulster. I have in my constituency an industry which until the end of last year employed over 20,000 men. I refer to the shipbuilding industry. Within the first six months of this year more than 7,000 men will be declared redundant in that industry. That is 7,000 on top of the existing 7½ per cent. unemployed.
I do not want to weary the Committee by going into great detail about our textile industry, because we went into those details at great length in a debate on 12th May, initiated by my hon. Friend the Member for Belfast, North (Mr. Stratton Mills). I should like to summarise the facts. In my constituency there is a big and well established old mill—York Street Linen Mill, known throughout the world. At the end of the war its export earnings were greater than the exports of any other industry in the United Kingdom. The linen industry has not received £30 million to reorganise, close down or consolidate. It has had to consolidate on its own. Recently the mill has unfortunately had to state that it will close its gates and release 1,500 more men and women on to the already inflated unemployment list in Northern Ireland.
I move the Amendment because of that fact, because of the situation in the shipyards, and because of the situation in the rope works, where they can barely manage to compete and do so only by cutting their costs and prices to the very minimum so that they cannot afford even the risk of a surcharge such as this.
How could a firm such as Sirocco afford this surcharge? The firm manufactures extractor fans which compete with West German and other similar heavy industries throughout the world. The manufacturers of the equipment can be numbered on one's fingers. The firm's costs and prices are well known. The firm was faced recently with a rise in freight rates. The imposition of the surcharge might very well drive the firm out out of business. The United Kingdom would then lose valuable contracts.
In any event, even if the surcharge is not applied, how can prudent business-

men in the shipyards, the rope works, the linen industry and heavy engineering quote firm prices over the next year or eighteen months? We are continually being exhorted by the Chancellor of the Exchequer and the President of the Board of Trade to put every effort into our export drive. How can we do this when German, Swedish and Japanese firms are ready to quote fixed prices and firm delivery dates whilst we ourselves might be faced with an uncertain imposition of a tax which may add a quarter of a million pounds in one year to the payroll of one firm? How can we quote firm prices and win contracts?
I am not asking for any special relief or assistance for Northern Ireland. I am not asking for any charity. If the Government helped Northern Ireland by excluding her from the effects of the payroll tax, even though it was only a temporary and provisional measure in this year's Finance Bill, they would help the whole of the United Kingdom. We should help to ease the pressure, to which I referred in the speeches from which I have quoted, in the Midlands and the south-east of England, by encouraging the expanding firms in those regions which need labour so badly to go to Northern Ireland, where they would be free from fears both of shortage of labour and the imposition of the payroll tax.
It would help our export drive, because it would bring into production many of the people who are anxious and eager to find work in Northern Ireland but cannot do so. I am net pressing that Northern Ireland should be relieved of her fair share of ordinary taxes. This payroll regulator is, as has been stressed, not a tax but simply a regulator. It is meant to cream off at the maximum in this year £200 million of purchasing power from an over-strained economy in the south of England. The economy in the north of Ireland is not over-strained. We do not need to cream off this purchasing power. We are not forcing up prices by refraining from creaming it off.
I ask my right hon. and learned Friend to consider this concession again. I would rather for the rest of my Parliamentary career be dissociated from persons who refuse to support this Amendment. My right hon. Friend as Patronage Secretary is not here. I know


that an Amendment of this kind is embarrassing, but I would rather withdraw completely from the House of Commons than think that one man in my constituency who became unemployed as a result of the operation of the payroll tax was unable to earn his living. This particular tax would not affect just one man in Northern Ireland, but hundreds, perhaps thousands, of men.
I admit that my drafting of the Amendment may not be acceptable to the Chancellor, but I urge him, if he cannot accept the Amendment as I have drafted it, to consider it between now and the Report stage.

Mr. Ross: Do not give it way.

Mr. McMaster: I am merely asking that if the Chancellor has listened to the arguments that I have been adducing—on behalf of agriculture and other industries in Northern Ireland, on which, I hope, other of my hon. Friends will speak—he should consider this matter seriously between now and the Report stage when, perhaps, the Treasury may be able to draw up a more suitably worded Amendment to exclude Northern Ireland from the application of the tax.

Mr. Selwyn Lloyd: On two previous occasions this evening, I have come fairly close to this topic. My hon. and gallant Friend the Member for Fermanagh and South Tyrone (Lieut-Colonel Grosvenor) raised this point on the first Amendment. It was raised again later on. On each occasion I got as far as I dared within the rules of order and it was suggested that I go no further. Now, it being in order, may I say what I would have said then.
We are fully aware of the employment situation in Northern Ireland and of the deep feelings of Northern Ireland hon. Members with regard to it. We all admire the work they are doing to promote measures to alleviate it. But, so far as this proposal affects Northern Ireland, I clearly stated in my speech on the Second Reading—and the hon. Member for Belfast, East (Mr. McMaster) quoted from that speech:
In the special case of Northern Ireland, there is, of course, a difference there in that there is a separate insurance fund into which insurance contributions are paid and a separate Exchequer which will receive the proceeds of the surcharge. So the surcharge, if imposed, will be collected and retained by the Northern

Ireland Government, and there is no limit upon their discretion to use the proceeds as they think fit."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1632–3.]
So there was never at any moment from that time of the Second Reading speech any question that the Exchequer in London would keep the benefit of the surcharge.

Mrs. McLaughlin: Mrs. McLaughlin rose—

Mr. Lloyd: The reason for that was, I think, perfectly logical. The reason for that differentiation was that in Northern Ireland the responsibility for distribution of industry policy and decisions to attract employment and to deal with unemployment is the responsibility of the Northern Ireland Government and not of the Government in Westminster.
It is, therefore, perfectly logical from the beginning to have said that the proceeds of this surcharge derived from Northern Ireland should remain within the discretion of the Northern Ireland Government to disburse.

Mrs. McLaughlin: My right hon. Friend will surely agree that he has insisted, in fact, that the Northern Ireland Government must put on this charge if it should be levied throughout the United Kingdom. This is the whole crux of the argument. Northern Ireland should not have to put on this charge, but, if it is put on, how will the Northern Ireland Government repay it? This is the point on which we seem to be at loggerheads and on which we require further information.

Mr. Lloyd: If my hon. Friend had allowed me to proceed she would have got an answer to her question. It was not just lack of gallantry on my part that I did not give way to her earlier; it was because I thought I might have anticipated her question. From the point of view of logic, it seemed absolutely sound, because of the different responsibilities, that I should say from the beginning that it would be for the Northern Ireland Government to have complete discretion to deal with the proceeds of the tax as they think fit.
9.0 p.m.
I come now to the point of administration which my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) has just raised. I had a discussion


yesterday morning with the Minister of Finance of Northern Ireland. He told me that it is the intention of that Government to use the discretion to which I referred on Second Reading in order to refund the payments which had been made. That is an important statement of intention of the Northern Ireland Government.
I have to face also the fact that there is separate legislation, a separate fund and a separate or different card, and there is a special overprinted stamp used in Northern Ireland. Therefore, from my point of view—I am being perfectly frank with the Committee—I think it comes down quite simply not to a question of principle but to a question of administration. Which is the simpler thing to do? Is it simpler for me to insist that the tax be collected and then refunded by the Northern Ireland Government, or is it simpler for me to say that we will exclude them from the compass of the regulator?
I shall not emphasise them too much, but there are difficulties in exempting Ulster which affect a little the inter-changeability of cards in respect of employment and so on. What I am prepared to say to my hon. Friends is that I certainly will consider the matter between now and Report. [HON. MEMBERS: "Oh."] It is not unreasonable. I shall have discussions with the Government of Northern Ireland because they are very much involved on the administration side. I am not at all unsympathetic to the case put and, from my point of view, there is no matter of principle.
I said at the beginning that the Exchequer here in London would not receive the benefit of this particular surcharge in Northern Ireland. Therefore, from my point of view it is a question of administration. I have no bias towards the view which I originally propounded, that Northern Ireland should be within the proposal and it should be for the Government of Northern Ireland to deal with the matters involved. I shall look at it. I am not at all unsympathetic to the case put earlier by by my hon. and gallant Friend the Member for Fermanagh and South Tyrone and now by my hon. Friend the Member for Belfast, East. I shall consider it again between now and Report.

Mrs. McLaughlin: Mrs. McLaughlin rose—

The Temporary Chairman (Mr. W. R. Williams): Mr. Lee.

Mr. Frederick Lee: With apologies to the hon. Lady—

Mrs. McLaughlin: Oh.

The Temporary Chairman: I am sufficiently human not to have overlooked the fact that the hon. Lady is present. Mr. Lee.

Mr. Lee: With apologies to the hon. Lady the Member for Belfast, West (Mrs. McLaughlin) for daring to speak in a Committee of the British House of Commons, I wish to consider for a moment the point at which we now stand following the Chancellor's speech. The right hon. and learned Gentleman has said that he is making no concession which he did not make when introducing his Budget.

Mr. Lloyd: That is a complete travesty of what I have been trying to say. I have said from the very beginning that the Exchequer in Westminster would not receive the benefit of this surcharge in Northern Ireland. I said that I would look at the matter again between now and Report and consider whether we could deal with the matter in some way along the lines suggested or whether we should adhere to the original proposal under which Ulster would have been kept within it. I have not said at all that I shall stick to my original proposal.

Mr. Lee: The right hon. and learned Gentleman's speech tonight did no more than paraphrase what he said in introducing his Budget. He said that moneys collected in Northern Ireland would not go into the British Exchequer but would remain there. We knew that from his Budget speech. I suggested, therefore, that the position is in no way different from what we all knew it to be when hon. Members opposite put down their Amendment. No concession has been made.
As the hon. Member for Belfast, East (Mr. McMaster) said, this issue was discussed fairly extensively during the debate on Northern Ireland which we had some weeks ago. I recall that I mentioned the rather absurd position in which we find ourselves. First, we set


up, at public expense, machinery to collect this tax in Northern Ireland and then go to further expense to ensure that we give it back to the people from whom it has been collected. I pointed out that the Minister of Finance in Northern Ireland had said that while he was very keen to ensure that all firms which paid this tax got it back again, it was a rather complicated manoeuvre to give it back to them. He said that it would tax the ingenuity of his financial experts to find out how to give it back.
In my own simple way I ask whether it would not be better if we did not tax Northern Ireland firms at all. Surely this is precisely the issue that we are arguing. Why the right hon. and learned Gentleman believes that he is making a concession merely by reiterating that the money will remain in Northern Ireland when we know from Captain O'Neill that it will be a most complicated job—[Interruption.] The hon. Gentleman can get up at the Box if he wishes to interrupt instead of sitting there chuntering at me.

Mr. Barber: I heard what my right hon. and learned Friend said. It went considerably further than what he said on a previous occasion. Today he said that he would consider with his opposite numbers in the Northern Ireland Government whether he can go further and do what my hon. Friends representing Northern Ireland constituencies want him to do. That is something entirely new. I am sorry to intervene since my right hon. and learned Friend has spoken, but I was invited to do so by the hon. Gentleman.

Mr. Lee: I am glad that I invited the hon. Gentleman to interrupt. Will he therefore say why he will not accept the Amendment? The difference between what he said, namely, that he will consider the matter and accepting the Amendment is the nub of the matter that we are discussing. We are all agreed that, while the imposition of the payroll tax is nonsense anywhere in Great Britain, it is even greater nonsense in Northern Ireland because of its 7½ per cent. unemployment.
I repeat—I am sorry if the Economic Secretary does not like this—that we are no further advanced now than we were when the Amendment was tabled.

Mr. Lloyd: I am sorry to interrupt the hon. Gentleman, but what he has said is a reflection on me personally. I have said that I will consider carefully between now and the Report stage whether I can exclude Northern Ireland from this tax altogether. Is the hon. Gentleman suggesting that I did not make that statement in good faith?

Mr. Lee: Not in the least. I am saying that we have known for many weeks that what the right hon. and learned Gentleman said tonight was the cast, namely, that the money would not come here but would stay in Northern Ireland. That being so, there is no reason why he should not accept the Amendment.
We all know the difficulties involved. I have mentioned them. The Finance Minister in Northern Ireland has openly stated what those difficulties are, but surely between presenting his Budget and this late stage the right hon. and learned Gentleman has had ample time to find out how he can enable this tax not to be gathered in Northern Ireland instead of merely gathering it and then giving it back again to the people from whom he collects it. This is a source of surprise to us. When the right hon. and learned Gentleman said earlier in the debate and it was suggested that it was out of order, he said it as though it was something entirely new. I do not doubt the right hon. Gentleman's bona fides. I am sure he realises that it is nonsense to introduce this tax in Northern Ireland.

Mrs. McLaughlin: Hear, hear. Go on.

Mr. Lee: The hon. Lady is very excited tonight. I do not know what has been going on over that side of the Committee. The hon. Lady and I do not often find ourselves on the same side. I am glad she is so enthusiastic about what I am saying. During the debate on Northern Ireland I was the first to, suggest that this procedure was nonsense and that the right hon. and learned Gentleman should reconsider it. Therefore, if it is nonsense when there is 7½ per cent. unemployment, at what stage does it fail to be nonsense? Does it fail to be a nonsense in Scotland where there is an unemployment figure of 3½ per cent.?


I know that these are the problems facing the right hon. and learned Gentleman, and I do not wish to embarrass him too much. But we on this side of the Committee are convinced that this Amendment is well worthy of our support. We shall support the hon. Gentleman and his friends in the Lobby at the end of this debate. Many of us have been across to Northern Ireland—

Mrs. McLaughlin: Has the hon. Member a sufficient number?

Mr. Lee: If I may dare to hold up the hon. Lady's speech for just a minute longer, may I say that many of us on this side of the Committee take a very great interest in the welfare of the people of Northern Ireland. For ten years they have had a very bad break from this Government in that while they have had consistently a heavy rate of unemployment, the whole economic and financial policy of this Government has for ten years excluded the facts regarding Northern Ireland merely because there was a high rate of employment in Britain.
The problem of Northern Ireland must not be shelved. The Government have never tried to meet the fact that consistently there has been a high rate of unemployment in Northern Ireland. From this side of the Committee we have tried to help, and we know that the Northern Ireland Labour Party has for years advocated policies some of which are now becoming acceptable to the Tories of Northern Ireland. It has taken a long time for them to reach this point but now they are beginning to see the wisdom of much of the constructive work of our friends in Northern Ireland. We congratulate them on catching up. We hope that they will continue to study what we say.
I do not wish to delay the hon. Member from making her speech. We believe that it is of interest to hon. Members representing constituencies in Northern Ireland that we should support them in this critical moment in the affairs of Northern Ireland. They can rely on it that we shall march solidly into the Division Lobbies with them. We reiterate that there has not been enough said by the Chancellor tonight which has improved their position above

that which they knew it to be before putting down this Amendment. We invite them to come with us into the Division Lobbies against the Government.

Mrs. McLaughlin: I claim the right to speak without being either on one side or the other on this important occasion—

The Temporary Chairman: Order. I shall have to ask the hon. Lady—

Mrs. McLaughlin: If I must, I will stand within the Bar, but I have already made it clear—

The Temporary Chairman: Order. I hope that the hon. Lady will leave her position outside the Bar of the House and resume her seat in the Chamber, and that she will try to work within the rules of the House, as every other hon. Member is expected to do.

Mrs. McLaughlin: I think it important that I speak for this Amendment, but I hope that I have already made clear that I speak on behalf of Northern Ireland without it having any let or lien on any part or side or party within this Committee.
Tonight, we have listened to hon. Members who have spoken on behalf of the payroll tax and against the payroll tax. We have listened to hon. Members who have put the point of view of certain areas which require special attention, and we have listened with great attention to the Chancellor, and his promise that on the Report stage of this very important Bill he will give particular attention to the needs of Northern Ireland.
I am here, then, despite what has been said by the hon. Member for Newton (Mr. Lee), who always shows such great attention to Northern Ireland when we come to discuss the Finance Bill or other important matters, but who, I am sad to say, does not pay such great attention to Northern Ireland's urgent day-to-day needs. I wish that we could have the same attention paid to the day-to-day needs that we get only very occasionally. On the other hand, Her Majesty's Government have achieved practical results by their work and determination to see that Northern Ireland is looked after. I must say this honestly, and I would say it beyond the Bar of the House, if I had the opportunity.
This payroll tax, as it is called—this regulator—has been designed to do something for the country in times of national emergency, when it is necessary to ensure that the economy of the country is stabilised. It is said that what is good for one part of the United Kingdom is good for the lot. In this case, I cannot believe it, nor can my hon. Friends who have supported the Amendment.
9.15 p.m.
We in Northern Ireland know very well that when prosperity reigns it reaches us much more slowly than any other part of the United Kingdom. We know that when prosperity dwindles, we dwindle much more quickly than any other part of the United Kingdom. [Laughter.] It is all very well to laugh, to sneer, or to be casual about it, but we in Northern Ireland know that we have a difficulty which is much greater and is much slower to resolve than in any other part of the United Kingdom.
That is why I support the Amendment, to get the Chancellor of the Ex-chequer not only to consider this matter on Report, but to take a definite decision in the critical situation in which we find ourselves. [HON. MEMBERS: "Hear, hear."] Hon. Members may say, "Hear, hear," and support us, and we are, no doubt, grateful for that, but that is not the crux of the matter. The crux of the matter is that we have six counties in the northern part of Ireland which are part of the United Kingdom integrally, economically and in every way.
We in the six counties know that we were not put in that position of being part of the United Kingdom by any choice of ours. We would have preferred to be a larger part of the United Kingdom. But because we are a small number of counties—six—separated by water from the rest of the United Kingdom, we feel all the economic difficulties more seriously and more quickly.
When we come to the question of the payroll tax, this economic regulator, we know that we are already accepting the first regulator and that the second one cannot he for us. We ask the Chancellor seriously to consider this issue. I know that he has passed it off to the Northern Ireland Government and said, "You will administer this, you will impose it and draw in the money." That means that every employer in Northern Ireland,

whether employing 100, 200, or 300 people, will be involved in this proposal should an economic crisis arise in Britain.
That means that the small industries, the rural industries, industries which I know so well, working on a small economic margin, will be the hardest hit. This tax could not be satisfactory for the whole of the United Kingdom. That is why I venture to take the time of the Committee and ask for reconsideration of this urgent matter.
We can think of it in, perhaps, Gilbert and Sullivan terms. The Northern Ireland Government are to be forced by the Government at Westminster to impose a tax which they will pay back. To whom and how much will they pay back? Who will pay the cost of administering it? Will it be paid back to those employing merely a few workers, or simply to the large employers? Are we to consider only the aircraft and shipbuilding industries, or will we consider everyone?
If the Chancellor had decided tonight to use Northern Ireland as a guinea-pig area in this new idea, Northern Ireland could be exempted permanently from this tax and used as an area in which he could study the repercussions of exempting such an area from the tax. We in Northern Ireland have sympathy with hon. Members who represent Scottish development districts. We have heard their propositions put forward, but we know that they differ from us in one respect. They differ particularly in the fact that they are all, except Northern Ireland, on the mainland.
We in Northern Ireland have the extra freight charges and the extra cost of getting the raw materials which are essential to our economic development there and getting them back again into the United Kingdom in the form of finished products. We know perfectly well that we have a bigger unskilled labour force however hard we try to train them, because we have a greatly increasing birthrate. This is part of the problem when it comes to any, question of a payroll tax. The Chancellor has said that he will look at this-matter again on Report, but tonight I want him to say more and to give us a very favourable idea of what he will say on Report.
The Chancellor tells us that the Minister of Finance for Northern Ireland has said that he will repay the payroll tax


to those who have to pay it if it is imposed in the next twelve months, but if a tax is suggested it is surely not done in jest. It is done with some genuine intention that it may have to be imposed. If it has to be imposed we must accept that in Northern Ireland it cannot and must not be imposed in its present form.
It must be remembered that Ministers in Northern Ireland are limited in what they can say because they are only working within the framework in which they are allowed to work. Despite what the Minister of Finance for Northern Ireland has said, I ask my right hon. and learned Friend to give us greater assurance here tonight. I wish that the Minister of Finance far Northern Ireland had told me and the public that he would repay this payroll tax. Problems in Northern Ireland arise entirely of the nature of the Opposition in the Parliament there. If there were a stronger and better Opposition there we might have a clearer indication of what is going on, but the House of Commons here is the only place where efforts can be made to clear up this problem.
We believe that the Northern Ireland Government are given power to charge this tax to individual industries if and when the tax is applied and that they are given power also to pay it back, but we are not told—and this is the important issue—whether or not the Government there will impose it. This is the crux of the whole matter. Time and again we from Northern Ireland have suggested in the House and in Committee that Northern Ireland is a small economic entity in the United Kingdom which should be used for many experiments. This is a first and vital experiment. Let Northern Ireland be exempted from the payroll tax and let us see how that works.
Northern Ireland is a part of the United Kingdom with many industries, among them shipbuilding, which have been hit by the present serious world situation. I do not want to weary the Committee now with the problem of shipbuilding, but we all know that in the United Kingdom today it is extremely difficult to obtain a contract for shipbuilding. It is usually swiped by Germany, Japan, or some other country. We have many ship repairers in the industry who will not see the age of 50 again. They are

among the great number of ardent workers in Northern Ireland who are without the skill of full training; and the demand for ship repairing is decreasing.
There is also the problem of aircraft building. Hon. Members have sat through innumerable debates on the subject and they know perfectly well that when it comes to aircraft building we are told that Ulster is either too far in front or too far behind. We in Northern Ireland have never hit the right moment for a number of years. When it comes to vertical take-off aircraft and similar ideas we are far in advance of other countries, but we have found it extremely hard to persuade Her Majesty's Government and the countries of the Western world from which we hope to obtain commercial contracts that that is a fact.
Here again, we know that we are—

The Temporary Chairman: Order. I am finding it extremely difficult to hear what the hon. Lady is saying. As I may have to try to rule her out of order later if she does not change, I hope to hear everything that she is saying.

Mrs. McLaughlin: I am sorry, Mr. Williams. I shall do my best, first, to keep within the terms of the Amendment, and, secondly, to make myself heard.
We must see that every man in Northern Ireland has his job maintained for him, if it is possible to do that, not because he is a man who wants a job without any effort, but because he is a man in a part of the United Kingdom which never catches up with the growth and development which takes place in the rest of the United Kingdom.
We Ulster Members listen patiently to many people talking about Scotland and about the development districts in other parts of England and Wales. We listen with sympathy and enthusiasm. In turn, we expect an equal amount of sympathy and enthusiastic support from those hon. Members—

Mr. Ross: The hon. Lady says that she hopes we will listen to her speech with sympathy and support her. Did she go into the Lobby with Scottish Members when we were fighting the Government on this issue? Was she with us?

Mrs. McLaughlin: It may interest the hon. Member for Kilmarnock (Mr. Ross) to know that I was not in either Lobby. I wished to stand beyond the Bar, but I was not given the opportunity. To do so was out of order.

Mr. Ross: Would not the hon. Lady's case be worse if we took the same way out? We hope to go into the Lobby with Northern Ireland Members. Why does she not do the same for Scotland?

The Temporary Chairman: Order. The hon. Lady must not overstep the mark. Like everybody else she must speak from the proper place, and I ask her again to speak to the Amendment before the Committee.

Mrs. McLaughlin: Thank you, Mr. Williams.
The hon. Member for Kilmarnock reminds me of the fact that for many weeks I supported and followed a number of matters in the Scottish Grand Committee. I would have been saved a great deal of trouble if I had not been involved in that.
Tonight, I hope that we can concentrate on Northern Ireland to which, by the Amendment, I have tried to draw attention in my humble, simple and possibly incapable way. We have waited for many weeks for an answer and for guidance from the Government on this matter. We know that the original desire was to help the country. We know that the original necessity for this pay-roll tax was to control the economy, and nobody from Northern Ireland will ever desire to argue about the necessity for keeping a strong economy in Great Britain. However, there are times when it is not possible to support items in a Finance Bill which hurt certain parts of the United Kingdom.
This payroll tax is hurtful in its present form to Ulster, the six counties which are very important to the well-being of the United Kingdom and which do so much for the export trade. I am not talking in terms of big industries. I am not talking in terms of thousands of employees. I am not talking even in terms of those small rural industries which employ 20 or 30 people. I am talking in terms of the textile industry, which is having an extremely hard time at present. It is coping with imports from Hong Kong and other parts of

our Commonwealth. At the same time, it is matching the unfair competition from Iron Curtain countries. None of this can be forgotten when we think of a payroll tax being imposed in certain areas which cannot afford it.
I am assured of the desire of the Government to do the right thing by Northern Ireland. [Laughter.] Hon. Gentlemen may laugh, but during the years when a Labour Government were in power, despite the high employment rate everywhere else, we never reduced our level of unemployment. If we had done, perhaps today I should not be speaking from this side of the Committee—and I say that sincerely.
9.30 p.m.
I am asking the Chancellor whether, before the Report stage, he cannot think again. I know that he will say that all this is being done through the National Insurance Scheme, and that we cannot have a different figure on the stamp. With respect, that is absolute nonsense. The figure on the stamp is what counts for National Insurance benefit, unemployment benefit and sick benefit, and these stamps could be overprinted in respect of the payroll tax. The Chancellor could get round it. We wish to pay our way, but we ask that the payroll tax should not be imposed in any circumstances in Northern Ireland.
All this will cause an argument. My right hon. and learned Friend will tell me that the Minister of Finance in Northern Ireland is happy; that he will do it in his own time, and will get a certain amount of money, which he will use in certain ways. I am thinking not of the shipbuilding industry or the aircraft industry; I am thinking of the small man, employing 20, 30, or perhaps 40 workers, who has done a great deal in the past to keep employment going, and who looks to the Government to see that his firm is kept going.
We will go along with the Chancellor in all the other regulators and forms of taxation, but we will not go along with him in this one. I ask him to think again about it and, before Report, to assure us that in this case Northern Ireland can lead the way. I hope that he will be able to assure us that, in the special circumstances, this area, which has industrial difficulties and which is not so wealthy as the rest of the United


Kingdom, can be the guinea pig and proving ground to show that the rest of this very good and sensible regulation can be applied in other parts of the United Kingdom.

Mr. H. Wilson: After that speech I want to make a suggestion to the Committee. The issues are quite clear as between the Government and the rest of us. They were stated by my hon. Friend earlier; they have been stated again by speakers from Northern Ireland, and the Chancellor has put his point of view. I suggest that we now take this matter to the test of a Division. After what has been said we still have to reach the major debate on the payroll tax. I suggest that we do this now. The hon. Lady has said that those in Northern Ireland look to the Government. They may look to the Government, but they must also look to the Opposition if they want to press their case in the Division Lobby. The Chancellor must now realise that the almost unswerving, dog-like devotion of the Ulster Unionist Party to this Government, which has often amazed us—we could not understand why they went on supporting the Government, in view of the way they had been treated—has been taken too far by this payroll tax. We intend to support the Amendment in the Lobby, and I appeal to all my hon. Friends to go into the Lobby now.

Mr. Selwyn Lloyd: I have done my best to meet the point of view put forward by my hon. Friend the Member for Belfast, West (Mrs. McLaughlin). I am not unsympathetic to the Amendment, and I have said so quite clearly. I also referred to the question whether It was worth while collecting the tax in order to hand it back again. It reminds me of what a certain Duke of York used to do. I am cognisant of the point. My hon. Friend is wrong in saying that the Minister of Finance of Northern Ireland is happy to have the money refunded and to deal with the matter in this way. I am not unsympathetic, but there are certain administrative problems about which I want to talk to the Northern Ireland Government. I promise to do that between now and Report. The drafting of the Amendment needs to be looked at. As I have

said, I am not unsympathetic to my hon. Friend's point of view, and I will, in good faith, consider the matter again.

Mr. Stratton Mills: Will my right hon. and learned Friend confirm that he accepts in principle the idea behind my hon. Friend's Amendment?

Mr. Lloyd: I accepted from the beginning that the Exchequer should derive no benefit from the Northern Ireland surcharge. If there is no great administrative difficulty involved, I think that I can meet my hon. Friend's point of view.

Mrs. McLaughlin: May I ask the Chancellor, before he sits down, on this very important point, can we be assured that if he finds a way to exempt Northern Ireland, or to exempt the Northern Ireland Government from the responsibility of imposing this tax in the next twelve months, he will do so? If so, I shall not find it necessary to go into the Lobby in support of the Amendment.

Mr. Lloyd: I am not getting up because I am sitting down on a very uncomfortable point. I think that I have met my hon. Friend in what I have said.

Mr. McMaster: In view of the under taking—[HON. MEMBERS: "Oh."] I put down this Amendment without fear or favour. Many things were said and pressure was brought to bear on which it is best not to dwell, but I should like to stress that I put this Amendment down clearly and indicated to my hon. Friends, with the agreement of those who put their names to it, that I would not withdraw it unless I got a concession with which I was satisfied.
On Thursday, 4th May, at the end of the debate on the Second Reading of the Finance Bill, my hon. Friend the Financial Secretary said:
Many points were raised in the debate which we can discuss further in Committee. A number of my hon. Friends from Northern Ireland are concerned, for example, about the payroll regulator, and I am authorised by my right hon. and learned Friend to say that in formulating any more permanent proposals, should he decide to do so, he will give serious consideration to the special circumstances affecting Northern Ireland."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1738.]
That was the only concession made to us during the Second Reading debate, and it is my honest and considered


opinion that the right hon. and learned Member has been most fair to us and has gone a great way to meet us. [HON. MEMBERS: "Oh."] For that reason, I beg to ask leave to withdraw the Amendment.

Hon. Members: No.

The Deputy-Chairman: Leave has not been granted.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 245. Noes 189.

Division No. 198.]
AYES
[9.37 p.m.


Agnew, Sir Peter
Glyn, Dr. Alan (Clapham)
Maitland, Sir John


Allan, Robert (Paddington, S.)
Goodhart, Philip
Manningham-Buller, Rt. Hn. Sir R.


Allason, James
Goodhew, Victor
Markham, Major Sir Frank


Arbuthnot, John
Gower, Raymond
Marlowe, Anthony


Ashton, Sir Hubert
Grant, Rt. Hon. William
Morales, Rt. Hon. Ernest


Atkins, Humphrey
Grant-Ferris, Wg Cdr. R.
Marshall, Douglas


Barber, Anthony
Green, Alan
Marten, Neil


Barlow, Sir John
Gresham Cooke, R.
Matthews, Gordon (Meriden)


Barter, John
Grimston, Sir Robert
Mawby, Ray


Botsford, Brian
Grosvenor, Lt.-Col. R. G.
Maxwell-Hyslop, R. J.


Baxter, Sir Beverley (Southgate)
Gurden, Harold
Mills, Stratton


Bell, Ronald
Hamilton, Michael (Wellingborough)
Montgomery, Fergus


Bennett, F. M. (Torquay)
Harris, Frederic (Croydon, N. W.)
More, Jasper (Ludlow)


Bennett, Dr. Reginald (Gos &amp; Fhm)
Harris, Reader (Heston)
Morgan, William


Berkeley, Humphry
Harrison, Brian (Maldon)
Naharro, Gerald


Bldgood, John C.
Harrison, Col. Sir Harwood (Eye)
Nicholls, Sir Harmer


Biggs-Davison, John
Hay, John
Nicholson, Sir Godfrey


Birch, Rt. Hon. Nigel
Heald, Rt. Hon. Sir Lionel
Noble, Michael


Bishop, F. P.
Henderson, John (Cathcart)
Nugent, Sir Richard


Bourne-Arton, A.
Hendry, Forbes
Orr, Capt. L. P. S


Box, Donald
Hiley, Joseph
Osborn, John (Hallam)


Boyle, Sir Edward
Hill, Dr. Rt. Hon. Charles (Luton)
Osborne, Sir Cyril (Louth)


Brain, Bernard
Hill, Mrs. Eveline (Wythenshawe)
Page, John (Harrow, West)


Brewis, John
Hill, J. E. B. (S. Norfolk)
Page, Graham (Crosby)


Bromley-Davenport, Lt.-Col. Sir Walter
Hinchingbrooke, Viscount
Pannell, Norman (Kirkdale)


Brown, Alan (Tottenham)
Hirst, Geoffrey
Partridge, E.


Browne, Percy (Torrington)
Hocking, Philip N.
Pearson, Frank (Clitheroe)


Buck, Antony
Hollingworth, John
Peyton, John


Bullard, Denys
Hopkins, Alan
Pickthorn, Sir Kenneth


Bullus, Wing Commander Eric
Hornby, R. P.
Pike, Miss Mervyn


Burden, F. A.
Howard, John (Southampton, Test)
Pilkington, Sir Richard


Butcher, Sir Herbert
Hughes-Young, Michael
Pitman, Sir James


Butler, Rt. Hn. R. A. (Saffron Walden)
Hulbert, Sir Norman
Pott, Percivall


Campbell, Sir David (Belfast, S.)
Hurd, Sir Anthony
Price, David (Eastleigh)


Campbell, Gordon (Moray &amp; Nairn)
Hutchison, Michael Clark
Prior, J. M. L.


Carr, Compton (Barons Court)
Iremonger, T. L.
Prior-Palmer, Brig. Sir Otho


Carr, Robert (Mitcham)
Jackson, John
Proudfoot, Wilfred


Chanson, H. P. G.
James, David
Pym, Francis


Chataway, Christopher
Jenkins, Robert (Dulwich)
Quennell, Miss J. M.


Clark, Witham (Nottingham, S.)
Johnson, Dr. Donald (Carlisle)
Ramsden, James


Cleaver, Leonard
Johnson, Eric (Blackley)
Rawlinson, Peter


Cole, Norman
Johnson Smith Geoffrey
Redmayne, Rt. Hon. Martin


Cooke, Robert
Jones, Rt. Hn. Aubrey (Hall Green)
Rees, Hugh


Cordeaux, Lt.-Col. J. K.
Kerans, Cdr. J. S.
Rees-Davies, W. R.


Corfield, F. V.
Kerby, Capt. Henry
Renton, David


Coulson, J. M.
Kerr, Sir Hamilton
Ridley, Hon. Nicholas


Courtney, Cdr. Anthony
Kitson, Timothy
Roberts, Sir Peter (Heeley)


Craddock, Sir Beresford
Lagden, Godfrey
Robinson, Sir Roland (Blackpool, S.)


Critchley, Julian
Lambton, Viscount
Roots, William


Crosthvraite-Eyre, Col. Sir Oliver
Langford-Holt, J.
Ropner, Col. Sir Leonard


Cunningham, Knox
Leavey, J. A.
Royle, Anthony (Richmond, Surrey)


Curran, Charles
Leburn, Gilmour
Russell, Ronald


Currie, G. B. H.
Lewis, Kenneth (Rutland)
Scott-Hopkins, James


d'Avigdor-Goldsmid, Sir Henry
Lilley, F. J. P.
Seymour, Leslie


Deedes, W. F.
Linstead, Sir Hugh
Shaw, M.


de Ferranti, Basil
Litchfield, Capt. John
Shepherd, William


Digby, Simon Wingfield
Lloyd, Rt. Hon. Selwyn (Wirral)
Simon, Rt. Hon. Sir Jooelyn


Doughty, Charles
Longbottom, Charles
Skeet, T. H. H.


Duncan, Sir James
Longden, Gilbert
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Duthie, Sir William
Loveys, Walter H.
Smithers, Peter


Elliot, Capt. Walter (Carshalton)
Lucas-Tooth, Sir Hugh
Spearman, Sir Alexander


Elliott, R. W. (Nwcstle-upon-Tyne, N.)
McAdden, Stephen
Spear, Rupert


Emery, Peter
MacArthur, Ian
Stevens, Geoffrey


Errington, Sir Eric
McLaren, Martin
Steward, Harold (Stockport, S.)


Farr, John
Moclay, Rt. Hon. John
Stodart, J. A.


Fell, Anthony
Maclean, Sir Fitzroy (Bute &amp; N-Ayrs.)
Stoddart-Scott, Col. Sir Malcolm


Finlay, Graeme
MacLeod, John (Ross &amp; Cromarty)
Studholme, Sir Henry


Fraser, Ian (Plymouth, Sutton)
Macmillon, Rt. Hn. Harold (Bromley)
Sumner, Donald (Orpington)


Gardner, Edward
Macmillan, Maurice (Halifax)
Talbot, John E.


Gibson-Watt, David
Macpherson, Niall (Dumfries)
Tapsell, Peter


Glover, Sir Douglas
Maddan, Martin
Taylor, Sir Charles (Eastbourne)




Taylor, Edwin (Bolton, E.)
Wakefield, Sir Wavell (St. M'lebone)
Wilson, Geoffrey (Truro)


Taylor, W. J. (Bradford, N.)
Warder, David
Wise, A. R.


Temple, John M.
Walker, Peter
Wolrige-Gordon, Patrick


Thatcher, Mrs. Margaret
Walker-Smith, Rt. Hon. Sir Derek
Woodhouse, C. M.


Thomas, Leslie (Canterbury)
Wall, Patrick
Woodnutt, Mark


Thompson, Kenneth (Walton)
Ward, Dame Irene
Woollam, John


Thornton-Kemsley, Sir Colin
Webster, David
Worsley, Marcus


Tiley, Arthur (Bradford, W.)
Wells, John (Maidstone)
Yates, William (The Wrekin)


Turner, Colin
Whitelaw, William



Turton, Rt. Hon. R. H.
Williams, Dudley (Exeter)
TELLERS FOR THE AYES:


Vosper, Rt. Hon. Dennis
Williams, Paul (Sunderland, S.)
Mr. Chichester-Clark and Mr. Peel


Wakefield, Edward (Derbyshire, W.)
Wills, Sir Gerald (Bridgwater)





NOES


Alnsley, William
Hart, Mrs. Judith
Pavitt, Laurence


Albu, Austen
Hayman, F. H.
Pearson, Arthur (Pontypridd)


Allaun, Frank (Salford, E.)
Henderson, Rt. Hn. Arthur (Rwly Regis)
Pearl, Frederick


Allen, Scholefield (Crewe)
Herbison, Miss Margaret
Popplewell, Ernest


Awbery, Stan
Hill, J. (Midlothian)
Prentice, R. E.


Bacon, Miss Alice
Holman, Percy
Price, J. T. (Westhoughton)


Baxter, William (Stirlingshire, W.)
Hoy, James H.
Probert, Arthur


Benson, Sir George
Hughes, Cledwyn (Anglesey)
Proctor, W. T.


Blyton, William
Hughes, Emrys (S. Ayrshire)
Pureey, Cmdr. Harry


Bowden, Herbert W. (Leics, S. W.)
Hunter, A. E.
Randall, Harry


Boyden, James
Hynd, John (Aftercllife)
Rankin, John


Braddock, Mrs. E. M.
Irving, Sydney (Dartford)
Reid, William


Brockway, A. Fenner
Janner, Sir Barnett
Roberts, Albert (Normanton)


Broughton, Dr. A. D. D.
Jay, Rt. Hon. Douglas
Roberts, Goronwy (Caernarvon)


Brown, Rt. Hon. George (Belper)
Jeger, George
Robertson, John (Paisley)


Butler, Herbert (Hackney. C.)
Johnson, Carol (Lewisham, S.)
Rogers, G. H. R. (Kensington, N.)


Callaghan, James
Jones, Rt. Hn. A. Creech (Wakefield)
Ross, William


Chapman, Donald
Jones, Dan (Burnley)
Royle, Charles (Salford, West)


Cliffs, Michael
Jones, Elwyn (West Ham, S.)
Short, Edward


Corbet, Mrs. Freda
Jones, J. Idwal (Wrexham)
Silverman, Julius (Aston)


Craddock, George (Bradford, S.)
Jones, T. W. (Merioneth)
Skeffington, Arthur


Cronin, John
Kelley, Richard
Slater, Mrs. Harriet (Stoke, N.)


Crosland, Anthony
Kenyon, Clifford
Slater, Joseph (Sedgefield)


Crossman, R. H. S.
Key, Rt. Hon. C. W.
Small, William


Cullen, Mrs. Alice
King, Dr. Horace
Smith, Ellis (Stoke, S.)


Darling, George
Lawson, George
Snow, Julian


Davies, G. Elfed (Rhondda, E.)
Ledger, Ron
Sorensen, R. W.


Davies, Harold (Leek)
Lee, Frederick (Newton)
Soskice, Rt. Hon. Sir Frank


Davies, Ifor (Gower)
Lee, Miss Jennie (Cannock)
Spriggs, Leslie


Davies, S. O. (Merthyr)
Lever, L. M. (Ardwick)
Steele, Thomas


Deer, George
Lewis, Arthur (West Ham, N.)
Stewart, Michael (Fulham)


de Freitas, Geoffrey
Logan, David
Stones, William


Delargy, Hugh
Loughlin, Charles
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Diamond, John
Mabon, Dr. J. Dickson
Swain, Thomas


Dodds, Norman
McInnes, James
Sylvester, George


Donnelly, Desmond
McKay, John (Wallsend)
Symonds, J. B.


Driberg, Tom
Mackie, John (Enfield, E.)
Taylor, Bernard (Mansfield)


Ede, Rt. Hon. C.
McLaughlin, Mrs. Patricia
Taylor, John (West Lothian)


Edelman, Maurice
McLeavy, Frank
Thomas, Iorwerth (Rhondda, W.)


Edwards (Rt. Hon. Ness (Caerphilly)
McMaster, Stanley R.
Thompson, Dr. Alan (Dunfermline)


Edwards, Walter (Stepney)
MacMillan, Malcolm (Western Isles)
Thomson, G. M. (Dundee, E.)


Evans, Albert
MacPherson, Malcolm (Stirling)
Thornton, Ernest


Fernyhough, E.
Mallalieu, E. L. (Brigg)
Timmons, John


Finch, Harold
Malialieu, J. P. W. (Huddersfield, E)
Ungoed-Thomas, Sir Lynn


Fitch, Alan
Manuel, A. C.
Wade, Donald


Foot, Dingle (Ipswich)
Mapp, Charles
Wainwright, Edwin


Foot, Michael (Ebbw Yale)
Marquand, Rt. Hon. H. A.
Warbey, William


Forrest, George
Marsh, Richard
Watkins, Tudor


Fraser, Thomas (Hamilton)
Mason, Roy
Weitzman, David


Galpern, Sir Myer
Mendelson, J. J.
Wells, William (Walsall, N.)


George, Lady Megan Lloyd (Crmrthn)
Millan, Bruce
Whitlock, William


Ginsburg, David
Milne, Edward J.
Wilkins, W. A.


Gooch, E. G.
Mitohison, G. R.
Willey, Frederick


Gordon Walker, Rt. Hon. P. C.
Monslow, Walter
Williams, D. J. (Neath)


Gourlay, Harry
Moody, A. S.
Williams, Ll. (Abertillery)


Greenwood, Anthony
Mort, D. L.
Willis, E. G. (Edinburgh, E.)


Grey, Charles
Moyle, Arthur
Wilson, Rt. Hon. Harold (Huyton)


Griffiths, Rt. Hon. James (Llanelly)
Neal, Harold
Winterbottom, R. E.


Griffiths, W. (Exchange)
Noel-Baker, Francis (Swindon)
Woodburn, Rt. Hon. A.


Gunter, Ray
Oswald, Thomas
Woof, Robert


Hale, Leslie (Oldham, W.)
Padley, W. E.
Yates, Victor (Ladywood)


Hall, Rt. Hn. Glenvil (Cohn Valley)
Paget, R. T.



Hamilton, William (West Fife)
Pannell, Charles (Leeds, W.)
TELLERS FOR THE NOES:


Hannan, William
Parkin, B. T.
Mr. Charles A. Howell and




Mr. McCann.

Motion made, and Question proposed, That the Clause stand part of the Bill.

9.45 p.m.

Mr. H. Wilson: Although the hour is late, I am sure that the Committee does not wish this Question to go through without reasonable debate, because although we have spent all day on important Amendments, all of them have been on relatively narrow, however important, points. The first, in effect, was on the exemption of certain areas of the country. The second was on the vital point of young workers. The third was on Northern Ireland. We have still to consider the case for or against the payroll tax, the Chancellor's second regulator. I wish to say right away that we are opposed to the regulator. We felt it right to vote as we did on various Amendments, but we are against the proposal as a whole and we intend to vote against it.
The proposal for a payroll tax was first made last winter by a number of people outside Government circles and for reasons quite different from those now professed by the Chancellor. When is was first proposed, the idea was to discourage the hoarding of labour. It is utterly useless from that point of view. If one recalls the motor-car recession of last winter, when many motor-car firms held on to their labour during a period of short-time working, even though men were on only two or three days a week, one recognises that a tax of 4s. a week would have made no difference whatever to their willingness to hang on to their labour, even if it were thought desirable that they should have got rid of the labour. If an employer hangs on to labour when he has to pay wages, he will not be deterred or influenced one way or the other by having to pay another 4s. That is not the issue. The motor-car manufacturers held on to their labour confident that the market would return, and the market did return. It is a question of expectation and confidence much more than the minimal deterrent of 4s. a week from that point of view.
So what is the motive? In fact, the Chancellor has made it plain today, and so have his hon. Friends, that the motive is to syphon off spending power as a means of fighting inflation. It is the old argument, the old agony all over again. [An HON. MEMBER: "Boyle's Law."] It is, in fact, as one of my hon. Friends says, a form of Boyle's Law. From the moment the Prime Minister became

Chancellor of the Exchequer, now five years ago, the theory has been that whenever inflation threatens we must damp down demand and hold production down. That is the only answer the Tories have had all along to the problem of inflation, holding production down.
It is, of course, true that there may be times when there is so much excessive demand in the system that it becomes necessary by Budget surpluses or by any other means to syphon off excessive purchasing power, and, of course, as we said on Clause 8, we welcome the fact that the Chancellor is now converted from the over-dependence on monetary weapons. The fact that he realises that there is a need for other regulators shows he is throwing away the old monetary argument of his predecessors. What we object to here is not that he is converted to fiscal regulators from monetary regulators. We object to the particular fiscal regulator he is proposing in this payroll tax.
Most of the time for the past few years, despite Tory policies, the problem has not been excessive demand in this country. The problem has been much more the other way round. The problem has been the failure of this country to expand, because every time the Government get into a panic they put restrictions on investment, and that means that when the next crisis comes we have not the production, we have not the investment to meet it, and so once again restrictions are put on. The problem is the failure of this country to expand precisely because of the Government's policy of holding production and investment down.
What is the position today? Why does the Chancellor come along and ask for this power? Production is not rising. Apart from the enormous spurt which occurred in election year production has not risen. It has been static now for nearly 15 months. But costs are rising. That is a thing which the Tories have not yet learned, that it is when production is stagnant that costs rise. We found it in 1959. When production is rising costs are pretty stationary. That is precisely what we have argued year after year in our now almost classical debates with one Chancellor after another.
Production has not risen, costs are rising, and it is because production has


not risen that costs are rising at the present time. If we were expanding our production, if our productivity were increased, labour costs per unit would be falling and there would be no increase in prices. It has been recognised by many authorities who disagreed with us at the time that the stagnation of 1957 and 1958 forced up prices because productivity was not rising. It is obvious to anyone with knowledge of industry that if we hold production down in the individual factory below the economic level, then the result is that we increase costs, and increased costs mean increased prices.
The payroll tax is one stage and a worse further form of holding production down, I have argued that the policy of holding production down increases costs and prices. That is what this is designed to do. Labour costs are increased in this case by 4s. per head per week. We are always hearing speeches from the Chancellor—he spends his Bank holidays doing this—making powerful appeals against further wage increases. He considers that this country cannot afford increased wage costs, but, of course, he is increasing labour costs by this proposed payroll tax. If any trade union were to say, "We want a wage increase of 4s. a week", the Chancellor would say, "We cannot afford it. It would increase our wage costs. It would price us out of our export markets." Yet he proposes to impose this tax.
I know what his answer will be. His answer will be that if a trade union gets a 4s. a week increase that is extra spending power in the community, whereas if the payroll tax is put into effect the money will go to the Treasury. That is one argument. But I do not think the Chancellor realises what happens when the payroll tax is remitted. We are already on a higher structure of costs and prices. We are already seeing all over the country all sorts of people putting up prices for one reason or excuse or another. Recently we heard of big increases in laundry prices because of the increased tax on oil. Similarly, the payroll tax will lead to all kinds of unscrupulous people putting up prices a good deal more than would be justified by the tax, and they would never come down again.
What would be the Chancellor's reply to a trade union which, after perhaps six months of the operation of the payroll tax, when the Chancellor felt able to remove it, went to the employers and said, "You have been able to afford 4s. a week on wage costs all this time. Why cannot we have it now?" I do not think the Chancellor would then say, "That is perfectly all right."
What the Chancellor does not realise—and this is an argument which was made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) on one of the Amendments today—is that this payroll tax is also a very blunt instrument. For a great part of today we have been debating its bluntness in relation to individual areas of the country. If the Chancellor feels that he has got to syphon off purchasing power, he is imposing an instrument which will immediately lead to increased unemployment in Scotland, Merseyside, the North-East coast and, of course, Northern Ireland.
But if it is a blunt instrument as between areas it is equally a blunt instrument as between industries. As we argued from the first time that this was mentioned in the Budget debate, there are some industries which employ a lot of labour in relation to the selling value of the product and there are others which employ a relatively little labour. This is a penal tax which will have its effect on those who employ more labour. One thinks of coal mining and the railways as compared with other industries like chemicals and electricity generation, which, as the Economist says, is capital intensive, and employ little labour per £1 million worth of ultimate sale.
As I said earlier when debating the question of training and apprenticeship, this tax is bureaucracy run mad. Did the Chancellor, when he decided to impose this tax, think of its effect on the essential services? What about the Government themselves? We have to consider even the present Government as an essential service. All of the Government employees, whether manual employees in the Government's own factories—right up, I suppose, to the Chancellor himself and even the Prime Minister—will be assessed at 4s. a week on the payroll tax, and that means that the taxpayer will have to pay it.
What gain does the Chancellor think there will be from that kind of transfer from one pocket to another? He will spend half the evening transferring money from his United Kingdom pocket to his Northern Ireland pocket—and not altogether to the satisfaction of the Northern Ireland people. Now he is going to do it more widely. It is a wonderful way of finding jobs for the people. What about local government? Some local authorities are going to be very hard hit by this, especially the small ones where the product of a penny rate is so small. What about things like the hospital services? This is the first thing which occurred to some of us. We mentioned it in the Budget debate.
The real truth is that this was a half-baked proposition from the beginning. It is pretty clear that the Chancellor has no intention of introducing it. That is why he is throwing about these vague half promises about what he is going to do between now and the Report stage. It gets him over a Division, or something. He has not intention of introducing the tax.
10.0 p.m.
What about the reaction not only in his own party but in industry, his party's paymasters? The paymasters of the Tory Party have reacted very badly to this proposal, worse than to any other proposal I remember for many years. Obviously the Chancellor will not be allowed to introduce it. This measure was not thought out. The right hon. and learned Gentleman did not think it out in terms of hospital services, local government services, national government services, export industries and other industries where the consequences will be quite unpredictable.
Before I sit down I want to make two last points about the tax. The first is the method of collection. I want to say once again, as I did in the Budget debate, that there is something abhorrent to my right hon. and hon. Friends in the National Insurance system being used as a means to collect tax revenue. I do not think that view is confined entirely to this side of the Committee. It was quite clear from the Press, even before the Budget, that the Minister of Pensions and National Insurance felt just as strongly about this as we did. This was a most unusual

Press statement. It was quite clear from the Press the day before the Budget that the Minister of Pensions and National Insurance had offered his resignation that weekend because he was being forced to use his machinery, which is designed if not used for the purpose of social service and relieving hardship, for raising revenue for the Chancellor, turning himself into one of the most despised characters in history, namely the Publican, the man who collects taxes out on hire for the ultimate tax authority. I mean the Publican in the biblical sense. I am not attempting to trespass on the Licensing Bill. I am sure that you, Sir William, would quickly rule me out of order if I tried to do so.
We heard that the Parliamentary Secretary to the Ministry of Pensions and National Insurance was also going to resign. We heard that the Chancellor had come along with his half-baked proposal and faced such a storm that in the end he had to say, "We will just do it for this year and after this year we will try to find some other means of doing it". He could not climb down, though it must have been clear even then, before it was announced to the House of Commons, that it would not be put into operation.
The Chancellor would have saved us a great deal of trouble and we could all have gone home a good deal earlier if he had withdrawn the Clause altogether, Nobody likes it. I do not think that he likes it very much now. He has been attacked from all sides. In so far as hon. Members opposite have been allowed by the Patronage Secretary to make speeches at all, they have all made it plain that they do not like the measure. As I have said, industry does not like it. It has had a very bad Press. Why does not the right hon. and learned Gentleman withdraw it?
It is becoming a question of face. We all remember the last big question of face in the House of Commons. It concerned Blue Streak and the face of the then Minister of Aviation, who is now the Secretary of State for Commonwealth Relations. It is quite clear that the Chancellor should now bow to the storms, particularly because of the feeling we all have that a social service Ministry should not be an instrument of tax collection.
Secondly, we are very worried about the question of Parliamentary control. It is rather surprising that anyone should think it possible to hand over this vast taxing power to the Chancellor without much fuller consideration than we have given it so far today. On a previous Amendment concerning younger workers we were a little shocked when the Financial Secretary, who has some very ancient and historic responsibilities to the House of Commons for the control of taxation, said that he thought he could offer a concession. He said that the Chancellor had heard the debate and when he came to impose a payroll tax he would take due account of what had been said and act accordingly. We had to remind him that it is the House which decides taxation and gives authority for it and not the Chancellor or any other Member of the Government.
Here we are giving the Chancellor some £200 million of taxation power to be applied at any time he thinks right without any further check whatever. He can do it at any time which, together with the other regulator—which has already gone through in Clause 8—gives him £400 million of taxation power to be applied at the stroke of the pen. One must recognise that this amount is equal to half the revenue of an entire pre-war Budget. It is being discussed in two Clauses and, as I have said, it can be applied with the stroke of the pen. The House is being asked to go a long way in delegating its responsibilities.
After certain proposals, and with certain warnings, my hon. Friends allowed the other regulator to go through without a Division. We tried to amend it in certain ways, but this regulator we cannot let go through because we consider it to be wrong. Even if we considered it to be right, to be appropriate, even if we welcomed it in place of monetary regulators of the past, I am bound to say that it is not satisfactory that a Government should have the right to impose this substantial regressive tax and then not to require Parliamentary ratification until after 28 Parliamentary sitting days, for that is the present position.
The situation now is that if this Clause goes through the Chancellor could, for example, at the beginning of August—as soon as the Finance Bill becomes law

—perhaps 24 hours after the House has adjourned, sign an order imposing the payroll tax and this House would have no power to debate it or to reverse that decision until the middle or end of November—28 days after we return.
This is an intolerable delegation of responsibility, and it is, of course, a point which we shall press when we come to Schedule 3, which, I understand, will follow this particular Clause in our debate.
For all the reasons I have given, for the phoney economic analysis that lies behind this proposal and the additional power it gives to the Chancellor to hold production down, a means of fighting inflation, because it is a blunt instrument which will affect particular areas, industries and services, and because of the feelings about the method of collection through a social service Ministry and the lack of Parliamentary control, we intend to oppose this Clause resolutely and to vote against it in the Division Lobbies.

Mr. Selwyn Lloyd: I wish to speak on only one point, that which the right hon. Gentleman the Member for Huyton (Mr. Wilson) dealt with towards the end of his speech. It is the question of parliamentary control.
I think that there is force in the right hon. Gentleman's point that I am asking the House for a really important delegated power. I said originally that I could not conceive of circumstances in which, just after the House had risen, this power would be used with, perhaps, no chance of its being debated until November or some time like that.
I may be prepared, at a later stage, to translate the period of time into a calendar period and not one of sitting days, so that, within a fixed time, the Government would have to come to the House to approve the Order—not in terms of sitting days, but in a period of time.

Mr. H. Wilson: Does the Chancellor mean that he is accepting our Amendment to the Schedule, which is a reasonable one, and which is designed to substitute seven days for 28 days, because such an acceptance would enormously shorten the debate on Schedule 3 as a whole? If the Chancellor is accepting our suggestion on this point, then he will be meeting one of about ten objections we have to this Clause. But the other nine remain.

Mr. Lloyd: I do not think that I can go as far as seven days, but we will come to that later.

Sir Alexander Spearman: The right hon. Gentleman the Member for Huyton (Mr. H. Wilson), with the touch of exaggeration to which he is occasionally addicted, said that no one liked this tax. Nothing that he said in any way shakes my conviction in supporting is very strongly.
I do not support the proposed tax because I think that it will be a particularly effective redistributor of labour. In any case, that is not the point of it. The Clause states that its purpose is to regulate the balance between demand and resources. I do not support it because it is the best conceivable means of withdrawing purchasing power. I have always thought that some form of tax on retailer's turnover would do that more powerfully. I believe that, of the limited instruments which the Chancellor has, the proposed tax is the best available, and I think that he is to be very much congratulated on bringing in these entirely new regulators of which we have not heard hitherto.
Anyone wishing to support this proposal must do two things. He must show that the tax will be an efficient, even if not the most efficient, drawer-off of purchasing power, and he must show that circumstances might well arise when it would be required.
In my view, the effect of the tax will be to put up prices, which must be deflationary, to check rises in divdends, which must be deflationary, or to check rises in wages in excess of increases in production, which must be deflationary. Only in the fourth possibility, if it is to be taken out of undistributed profits, will the effect be far less deflationary. My guess is that its effect will not be all on prices, all on wages, or all on dividends, or undistributed profits. It will be a mixture of the four. Therefore, the Chancellor will probably not succeed in drawing off the full £200 million, but he will succeed in drawing off a very big proportion of it.
The most effective result, I think, would be in the effect on prices. I have never understood why those of my hon. Friends who favour a sales tax should oppose this proposal. As I see it, the tax

is a rather crude but simple form of sales tax which avoids many of the administrative difficulties of a sales tax. It is sometimes said that any taxation is inflationary. I doubt that the right hon. Member for Huyton will accept that, and I am quite sure that the Leader of the Opposition would not. If prices go up because of increases in income, whether they be due to higher wages or higher dividends, then, of course, there are continual rises in prices so long as the income goes on increasing; but if there is a rise in prices due to taxation there is no further rise after that has occurred.
I have tried to show that this tax will be effective in drawing off a large proportion of the £200 million of purchasing power. I turn, next, to the need for it.
At present, spending is rising quite sharply. We know that Government spending is up this year by about £100 million. Expenditure on industrial investment is up by £300 million or £400 million. The Chancellor predicted that expenditure on consumption might be up by 3½ per cent. He said that in his Budget speech, and what has occurred since shows that that may well be an under-estimate. That would amount to £500 million. Therefore, it seems that spending is going up this year by about £1,000 million.
10.15 p.m.
I am sure that production is going up, too. There is no question of the Government wanting to hold down production. But, with no reserves of labour, with under 300,000 unemployed and over 350,000 vacancies, how can production go up by anything like £1,000 million? It can only go up by an abnormal increase in growth due to technological improvements. It therefore seems to me that there will be a considerable gap between the amount of money people spend and the amount of goods that they buy.
If any hon. Member can show that my figures are without foundation, I will listen to him with interest, but if not, what is the alternative to the use of these regulators? Either we import much more—and how can we do that at present?—or have very severe inflation. Fourteen years ago we ran into balance of payment difficulties. They


were very severe and we had devaluation. On the 4th February this year them was a letter in The Times which stated that
The disastrous cost of the Cripps's devaluation can no longer be disputed:
That was said, not by a staunch Tory commentator, but by that well-known Socialist adviser, Dr. Ballogh.
Since I have hardly ever agreed with anything that Dr. Ballogh has said in public before, I should like to read an extract from what he said in his letter. He stated that devaluation
would represent the acceptance of a cut in real income, especially in real wages when other countries are steadily improving theirs. If the trade unions press for an increase in wages (as they are bound to do) a repetition of the devaluation would become inevitable. Confidence here and abroad would be undermined.
I think that every hon. Member agrees with that. What we do not seem to agree about is the extent of the action which might have to be taken to prevent it.
Ten years ago we again ran into a balance of payments crisis. On that occasion hon. Members opposite thought that discretion was the better part of valour. Perhaps they were wise. Four years ago we ran into another balance of payments difficulty which was put right by the drastic and heroic action of my right hon. Friend the Minister of Aviation. I do not think that enough credit has been given to him for that but the price was great. It meant industrial stagnation for a time. I am now asking the Chancellor to take measures in time, not to stop growth, but to regulate the pace of the growth so that stagnation does not occur.
I realise that the consequences of this tax may be disagreeable to some, but I do not think that in twenty years I have ever heard so much fantastic exaggeration as I have heard tonight about the possible consequences of this tax. I agree that there might be some inconvenience, but the consequences of not taking action in time could be disastrous. It is vital that the Chancellor should not wait until it is obvious that action should be taken because then the measures which he proposes would not be enough. That is what has happened before. It is vital that he should take action before it becomes obvious.
Hon. Members who have spoken today in favour of this tax have not, perhaps, been in the majority, but I have no doubt that a majority in favour of it will be shown in the Division Lobby. I hope that a message will go to the Chancellor from this Committee that we very much hope that the need for using this regulator will not arise, but that if it does arise he will have no hesitation about using it in time.

Dr. Horace King: I believe that if the Whips were not on tonight the Government could count on the support of only a handful of their usual supporters. I doubt whether they could even command the support of all of the Front Bench. I am certain that the Chancellor must be grateful for having discovered one enthusiastic supporter of what I regard as a very dangerous tax. I had hoped that after the weeks in which the public, the Press and the House of Commons have been talking about this Clause, the Chancellor would have bowed to the weight of public opinion and withdrawn what I consider to be a dangerous proposal.
If the right hon. and learned Gentleman wishes to have a regulator such as has been referred to by the hon. Member for Scarborough and Whitby (Sir A. Spearman) he should find a much fairer one than is suggested in the Clause. The proposal is an innovation. On the surface, it contains something which would commend it to the Committee. It seeks to use fiscal methods to compel employers to make the best use of the labour force available. It provides an incentive for employers to reduce their staff if possible.
I take it that the idea of the Government is that the men thus released may be used somewhere else to the better advantage of the country and that industrialists should become more efficient in the use of their most expensive commodity—human labour. But the trade union movement and the workers of the country see great danger in this new tax. They believe that the arguments for it are most specious. Already, it has been pointed out, in debates on the various Amendments which have been moved unsuccessfully by hon. Members on both sides of the Committee, that the proposals contained in this Clause may induce employers to get rid of workers without


any guarantee that they will be reemployed in other parts of British industry. Therefore, this represents a financial inducement to create unemployment.
I do not wish to deal in detail with the general arguments against the Clause which have been ably deployed by my right hon. and hon. Friends. I wish to deal with two points to illustrate the indiscriminatory nature of the proposals. My hon. Friend the Member for Goole (Mr. Jeger), who is unable to take pant in this debate, has given me two Press cuttings. One is the report of a meeting of the Goole Conservative and National Liberal Association—a lovely title. It met in a village in his constituency called Womersley. A report appeared in the local Press on 22nd April of this year that a farmer named Mr. Blee pointed out to the Conservative and National Liberal meeting the special labour problems of the farmer compared with the big industrialist. He said:
Nor could labour be laid off in hard times."—
by the farmer—
for the loss of a good man could mean disaster to a small farm. Efficiency in any business pay dividends…but the farming industry had more unpredictable factors than, say, in the production of a motor car.
But this tax is meant to drive the farmer to lay off labour in hard times. It gives him a financial inducement to do so.
The other cutting which was given to me by my hon. Friend is from the Hull Mail of 12th May, which reports the suicide of a farm labourer
who had been out of work longer than usual this winter….
This indiscriminatory new tax will hurt the farmer who tries to keep on the farm worker in slack times, either because of his ability or because of the good personal relationship that all hon. Members of the Committee will know exists between a good farmer and his farm hands. It may be argued that a tax which might be good for a colossal factory certainly cannot be good for the agricultural labourer or the farmer.
My second example is much closer to my own heart and experience. I am worried about the effect of this new tax on the disabled. Some of us try from time to time, from both sides, to put to the House the claims of B.L.E.S.M.A., the British Limbless Ex-Servicemen's

Association. At its recent conference at Margate in April, B.L.E.S.M.A. expressed great anxiety about this tax in an emergency resolution which was put to conference and unanimously carried.
I wish to quote from a letter which B.LE.S.M.A. sent to the Chancellor of the Exchequer on 27th April. It was as follows:
Our members recall the bitter experiences of limbless and other disabled workers in the years between the two wars when very few of them had the opportunity to secure or retain employment. The disabled in industry have since rendered a very valuable contribution to the nation's stability and there is no doubt that many employers are favourably disposed towards employing the limbless and disabled, but this is by no means a universal favour.
Our delegates fear that in the event of the introduction of a payroll tax, employers would tend to seek out what they consider their least productive units and dispose of them.
If they had to choose between dismissing men, the kind of man that the pressure would be upon them to dismiss would be the disabled.
I continue the quotation:
There are also real difficulties about mobility for the disabled in industry, since it is really impracticable for them to move from one area to another as presumably will be the intention if such a tax is introduced.
B.L.E.S.M.A. asked the Chancellor of the Exchequer for special consideration to be given to the anxieties which it expressed on behalf of all the disabled ex-Service men in industry. There is nothing in the Clause to relieve that anxiety.
Britain owes a debt to the men who sacrificed their limbs to make this or any other debate in the House of Commons possible, and this new tax, which provides an incentive to employers to get rid of the weakest links in their chain—the disabled—is a tax which, I hope, the Committee and the Chancellor, on reconsideration, will reject.
Similarly, the Clause is dangerous to Remploy. I remember when we had to attack a Committee of the House which investigated Remploy for applying to Remploy the standards of efficiency that would be applied to an industry consisting of able-bodied men. We cannot judge the magnificent work of Remploy by the standards that would be applied to ordinary, able-bodied men. Remploy, too, however, will have to pay a tax on every person who is working there. Obviously, if it applies the principle of


the tax, the tendency will be for Remploy to get rid of its most disabled workers.
Everybody—the halt, the sick, the lame and the blind—comes under the umbrella of this non-discriminatory new Clause. It can hurt the little man in industry. It can hurt the farmer. It can prove a nightmare to the disabled, who never know when the axe will fall, and but for whom we should not be debating.
I hope that the Chancellor will never use the Clause. I even hope that the Committee tonight will throw it out. I am certain that the bulk of hon. Members on the Government side are no more enthusiastic about the Clause than we are. Whatever its specious attractions, whatever its attractions even from the mopping-up point of view expressed by the hon. Member for Scarborough and Whitby, I believe that it can do more harm than any good it can possibly achieve.
10.30 p.m.
I usually do not pray in aid the assistance of the National Union of Manufacturers. N.U.M. means something much different to hon. Members on this side of the Committee, but even that union, a traditional supporter of Tory

Chancellors of the Exchequer, heartily dislikes this Clause. It does not believe that this provision can act as an economic regulator at all. In a memorandum which I am certain every hon. Member has seen and read, the union even suggests that it may have a contrary effect to that which the Chancellor proposes. The memorandum concludes with this passage:
Finally, the tax will bear upon all regions and industries alike, even though labour conditions vary greatly as between areas and industries. The National Union is, for all these reasons, firmly opposed to this possible tax and urges the Chancellor not to introduce it.
Manufacturers do not want this Clause; the trade union movement is bitterly opposed to it; disabled men and farmers fear it. There must be nobody who likes this new venture, except the hon. Member for Scarborough and Whitby and the Treasury.
My advice to the Chancellor is to be courageous and admit that his first impressions of the specious advantages of this proposal have given way to the opposition which it has aroused in all sections of the community, that he should not even take the powers that he asks for in the Clause, and that, if he does, he should never use them.

Mr. Basil de Ferranti: As I am afraid that there will not be too many hon. Members opposite left to hear my words of wisdom in a few minutes, I will endeavour to make my points as rapidly as possible. I do not understand how hon. Members opposite seem to be gauging the mood of this side of the Committee as being against this proposal. I wish to support it enthusiastically. It is a great pity that hon. Members opposite do not also support this tax. It is one of the few innovations by the Treasury which really could do something to increase the rate at which we are increasing productivity. It is a fresh, imaginative measure, and I should like to support it enthusiastically tonight.
This is the first time in 150 years that a Chancellor of the Exchequer has appreciated how fiscal policy should be adapted to the machine age. I should like to give my right hon. and learned Friend credit for what he is doing if I thought that he really understood why he was being clever. He said that this measure should be introduced as an economic regulator which might have the additional advantage of encouraging investment in labour-saving equipment. With respect, I think that my right hon. and learned Friend has this the wrong way round. Surely, the general consideration in favour of this tax is that we have been able, particularly in the last hundred years, to improve immeasurably, thank heavens, our standard of living.
It is not the politicians who have done this but the engineers and the scientists by the introduction of laboursaving machinery. Anything which accelerates that process should be a permanent feature of our taxation system, provided that it is within the bounds set by the limits of what is socially acceptable and desirable. The rôle of this tax as a regulator must be somewhat dubious. It could indeed, as hon. Members have pointed out, have the immediate effect of reducing the rate of investment by industry by reducing its profit levels. However, it seems clear to me that if this tax were to operate not as a net source of investment from industry but in conjunction

with a pro rata reduction in Profits Tax, a great deal of the opposition to it would disappear.
Incidentally, I think it is a pity that the words—
with a view to regulating the balance between demand and resources in the United Kingdom.
are included in the phrasing of the Clause. It seems that at best this is a matter of opinion and at worst it is purely sales talk. It is not necessary to write this sort of phraseology into the Clause.
It is understandable that my right hon. and learned Friend should have been a bit coy about the introduction of this tax. Obviously there are many things which have to be looked into, in particular the question whether it should be organised with a pro rata reduction in Profits Tax. But now that the tax has been proposed, and now that it has been looked into carefully, I believe that the time has come, as my hon. Friend said, for it to be introduced. If my right hon. and learned Friend is still hesitant about it, I perhaps I can give him three more reasons for introducing it.
On the simple principle of good cost accounting, we ought to think in terms of raising the whole of the £1,400 million required for health and education with a tax of this kind. This is because in general the cost of health and the cost of education arises as a result of the employment of people, and it is important that manufacturers employing people should realise what is the cost of doing so.
The effect of a tax of £1 per head per week would enable the Chancellor to eliminate the tax on company incomes altogether. I venture to say that if the Chancellor were to do this and shift company tax on to the payroll and away from profits we might soon have, rather than the 13 per cent. rise in gross national product per man hour since 1955, something more like Germany's 35 per cent. increase. I think that one can be confirmed in this view when one sees that the German employer pays 44 per cent. of the payroll in taxation compared with the United Kingdom's 14 per cent.
As a first step, I think that what could reasonably be done would be to raise


£330 million a year by means of a payroll tax of 6s. 6d. a week, which would enable the Chancellor to eliminate Profits Tax altogether. Perhaps I can illustrate the way in which this would work, and at the same time fulfil my obligations to the Committee. I see the hon. Member for Nelson and Colne (Mr. S. Silverman) in his seat, and I know that he will be hot on this point.
I am engaged as a manufacturer of what is vulgarly called automation equipment. I know that this tax will be good for my business. It is automation equipment which is enabling us to raise our standards of living, so any tax which is good for my business must be good for the nation as a whole. This unique combination of circumstances should not be allowed to pass unnoticed.
My second reason for supporting the Clause is the quite considerable prospect which is looming in front of us of the Common Market and the consequent reduction in tariffs which we will have to face in British industry. If it is to survive tariff reductions, industry must achieve considerable increases in efficiency, and the best way of achieving those increases is to take greater advantage of economies of scale. We need only look at the two Reports so far produced by the Department of Scientific and Industrial Research to realise that there are considerable areas in British industry where rationalisation could have enormous benefits.
This tax as I see it is a tax on the inefficient. I believe that it could do much to accelerate the process of rationalisation. Perhaps this would result in more and more mergers and takeovers, of more amalgamations, but that is exactly what we must have if we are to survive the increased competition from the Common Market countries.
May I illustrate this by describing typically what happens in British industry at the present time? A large industrial company produces a range of products. On some of them the company loses money. Of course, the company should give up making this part of the range of its products and enable its more efficient competitors to gain still further in efficiency by increased volume. The sad fact is that in very few cases does this happen. The products continue to

be made, scarce skilled labour continues to be inefficiently employed, the losses continue to be allowed for tax and, especially if the customer is one of the nationalised industries, the company continues to get orders on the time-hallowed and essentially British principle of Buggins' turn. I believe that this tax would go a long way to end this misuse of resources by making uneconomic business more uneconomic. In relation to the Common Market this is a matter of some urgency.
My third reason is this. As I see it, my right hon. and learned Friend the Chancellor of the Exchequer would have added interest in maintaining full employment because he would secure a tax from employment. Increases in unemployment would mean a reduction in revenue. This would give my right hon. and learned Friend an incentive to maintain the pledges given about maintaining full employment and would make him the more ready to find the money, which he will have to find in the coming years, for really effective retraining schemes in industry and for really effective measures to deal with the resettlement of labour that has to move.
For these reasons, namely, the acceleration of the rate of increase in the standard of living, increased rationalisation in industry and the protection of full employment rather than his own, I would urge my right hon. and learned Friend not to be deterred by the narrow-mindedness of some of the opponents of this tax but to accept this Amendment, with a reduction in the Profits Tax, and to introduce it as soon as he possibly can.

Mr. Julian Snow: All that I can say about the speech of the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) is that although I do not think that I have had the privilege of listening to him before, had he been making a maiden speech I should have used the conventional phrase and said that I hoped to hear many more speeches like that because I think that it exposed so completely the Tory principle of utterly ignoring social accountancy. The hon. Gentleman seemed to deploy a complete argument on behalf of business.
What perturbs me, although it does not surprise me, is that a Tory Member


should so consistently ignore the interests of small business in the country. Some months ago I asked the President of the Board of Trade a Question regarding the export capacity of small firms in my constituency, firms which employed 100 people or less. I put that Question deliberately because I was practically convinced at that time—I am absolutely convinced now—that the Government as a whole do not take into account either the productive capacity or the exporting capacity of small business in this country.
The President of the Board of Trade said that he did not think that the effort and the cost involved in finding out what was the capacity of small business were worth while. So far as I have been able to ascertain, if we took into account the companies in this country which employ less than 300 people on production as opposed to distribution we should find that their contribution to the economy of the nation is as much if not more than that of the major productive companies in this country. When I remember the claptrap preached by hon. Members opposite about the control of labour in the past five General Elections, I feel that this is a pretty cynical sort of measure to bring forward. What does it do other than control the way in which labour will be used and where it will be used?
10.45 p.m.
I make no apology for producing an example from my own constituency to show how this provision might affect one small element of the employment potential in a small business. I did not think this point merited my tabling an Amendment, but I think I am justified in producing it on the Question "That the Clause stand part of the Bill." I refer to the employment of women—chiefly married women—either as part-time or half-time employees in a small factory in my constituency. I have no interest in the firm concerned and, so far as I am aware, with two exceptions the board of the company and its senior managers are politically hostile to me. It is a small firm, with some historical significance in my part of the country, called William Tolson. It produces what are technically known as woven smallwares. [Laughter.] I am interested to hear the laughter of hon. Members opposite, because it indicates that they have not

much consideration for the small, rather obscure business.
This company manufactures material which is used for upholstery, for the boot trade, and for haberdashery—in short, tape. It employs a substantial number of married women on part-time work, and a typical housewives' shift, as it is called locally, would be from 6 p.m. to 10 p.m. or, in the daytime, from 8 a.m. to 4 p.m. A whole day in the factory would be from 7.30 a.m. to 5 p.m.—quite long enough as a day shift. The firm advises me that if this tax is imposed it will have to give serious consideration to the question whether it should continue to employ part-time people.
This may not be a matter of very great importance when we are considering an area with a large-scale, highly flexible local employment potential, but it means a lot in a small area, such as the little parish of Fazeley, where there is not much else to do, especially for women on part-time work. The Chancellor ought to consider a possible exemption in the case of these women, because their capacity and usefulness do not seem to have been given sufficient attention by the Government.
I have in my hand an expression of view by the managing director of the company, in which he says that he may be faced with a serious situation in which he has to terminate the employment of these people. This case is typical of what could well happen to small industry if this sort of tax were imposed.

Viscount Hinchingbrooke: The Treasury team look to me as if they want to go home. Before doing so I imagine that the Chancellor wants to get the Clause. If he wants to get my vote on it I shall be very grateful if I can have two assurances. [An HON. MEMBER: "I should go home"] The Chancellor can do better than that if he gives me the replies I want. In the first place, how are the proceeds from this regulator to be used? We should surely like an assurance that the proceeds of £400 million from both the regulators are to be used immediately and permanently for the reduction of debt if a full consequential deflation is to be secured.
I notice that the Civil Estimates are rising considerably and that the ratio


they bear to the national income is higher today than it was just after the Conservative Party came to power in 1951. We have had steadily rising Civil Estimates. I should be very grateful if my right hon. and learned Friend could say that the proceeds of the regulator will not be allowed to slide into the Estimates so that in the following year we are found to have higher Civil Estimates than ever before.
That is the first assurance. The second is consequential upon it. I made a little calculation and found that £400 million on a gross national product in the private sector of £1,600 million is 2½ per cent. If the Chancellor is to use this regulator to estop aggregate private saving by 2½ per cent., he must make a contribution for the Government equivalent to that, if he will be so good. The Minister of Aviation was very careful to do that in 1957. He drew a line above which Government expenditure was not allowed to rise. We do not want these taxes to be used step by step as a means of increasing the collectivist element in our society. I think my right hon. and learned Friend agrees with that.
Quite briefly, because the hour is so late, I ask my right hon. and learned Friend to give a general undertaking that about the same ratio of 2·5 per cent. will be given from the public sector of £6,000 million per year, yielding the sum of £210 million, to be set alongside the £400 million he is to exact from the private sector. With these two assurances, I shall be very happy to vote for the Clause.

Mr. Anthony Crosland: We have had two unusually obscure and exceptionally benign points made by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) in an appeal to the Chancellor. He should be rewarded with some assurance because of the almost excessive benignity with which he put the points in a way which differed from the touch of the jungle with which one associates his speeches. His speech was different in content from that of the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti). During his rather patronising lecture one became more and more doubtful about the principle he enun-

ciated, that what was good for Ferranti is good for the country.
The hon. Member defended the payroll tax for reasons largely disowned by the Chancellor and totally disowned by the hon. Member for Scarborough and Whitby (Sir A. Spearman). A very curious thing about this debate has been that all hon. Members opposite who have spoken in it have been defending this tax on completely different grounds. The hon. Member for Morecambe and Lonsdale went back to the original idea of the payroll tax when it was discussed in the Press long before the Budget, namely that it was justified as a means of forcing employers to disgorge labour and providing them with an incentive to introduce new labour-saving machinery. This always seemed to me to be a view without any evidence of any kind whatever to support it.
I am not concerned with the fact that this payroll tax is in fact quite different from that which was envisaged by those who thought this would be a great incentive to introducing labour-saving machinery. Those who took that view certainly did not envisage a variable tax and they did envisage a tax which was balanced, as the hon. Member wanted, by at least an equivalent reduction in Profits Tax. I grant that the tax has in fact come out differently from the way in which it was envisaged by those who took this view, but even if it came out differently I have never been able to see why that view should have been held.
Certainly with a payroll tax such as we have proposed to us in this Clause, only adding a few shillings on to wages bills, it is hard to imagine that it will have any great effect on employers' decisions as to how much labour to employ. It could only add from 1 to 2 per cent. on to the wages bill of a large firm, and that is simply going to have no practical effect on the firm's decision whether to invest in new machinery. The logic of the idea is in any case very vulnerable, because it is often forgotten when people talk about persuading employers to economise on labour in favour of machinery that machinery is also made out of labour and that the labour cost and hence the price of the machinery is bound to go up also as a result of the payroll tax.
Moreover, if it is the case that by putting up the price of labour by a payroll tax one is going to have this wonderful improvement in efficiency and increase in labour-saving investment, why does not this follow from annual wage increases? People who are most in favour of the payroll tax as an incentive in this direction are also the people who are most in favour of wage restraint and who say that even a 3 per cent. increase in wages will plunge us into the most terrible economic difficulties. One cannot have it both ways. If one thinks, as I do not, that a payroll tax has this great effect, at any rate wage increases must have one excellent effect, namely in the direction of encouraging labour saving investment. I personally do not think that either wage increases or a payroll tax have any significant effect in persuading employers to substitute capital for labour.
However, that has not been in practice the main ground on which this Clause has been defended. The hon. Member for Morecambe and Lonsdale was an exception. The main ground used for it this afternoon by the Chancellor and by the hon. Member for Scarborough and Whitby was that this regulator was a wonderful method of cutting down excess demand when this turns out to be necessary. With great respect to the hon. Member for Scarborough and Whitby, it is hard to understand how this can be defended as an efficient regulator of demand. He himself conceded—which is a very strong argument against any regulator—that it would largely fall on undistributed profits and to that extent would have none of the effect that he wants. And to the extent that it does not fall on undistributed profits, as he also partly conceded, it would be largely reflected in increased prices.
One characteristic which we do not want in a regulator for coping with a situation of inflationary demand is the characteristic of increasing prices and particularly increasing export prices. Consider the situation in which the hon. Member and the Chancellor are envisaging using such a regulator. The hon. Member for Scarborough and Whitby, and the hon. Member for Morecambe and Lansdale, I think, assumed that this situation is already with us—I do not think that it is—a situation in which demand, in their view, is rapidly

becoming excessive and that in consequence of this we shall run into a balance of payments crisis in the autumn, or at least that sterling will come under increasing pressure. If that is the situation we are faced with—a balance of payments crisis and loss of foreign confidence abroad and so on—the worst way of dealing with that situation is to use a regulator which has the positive effect of increasing export costs and export prices. It is a very ironic type of regulator to use—

Sir A. Spearman: Is the hon. Gentleman acquainted with the extent to which it would increase export prices? In the unlikely event of the whole amount being put on, he will find that it would put up export prices by 1d. on a £ article. That is very small compared with the rate of increase if we got excess demand.

Mr. Crosland: Granted that fact, nevertheless there is the further danger of this rise in prices aggravating a tendency to wage increases, and I wish to reiterate that although the total amounts may not be enormous over a certain range of articles, there is nevertheless a grave danger in using a regulator to correct a situation of excess demand which has the effect of exerting an upward tendency on costs and prices. I do not say that in no circumstances should one employ a regulator like that, but I do say that there are dangers in using it.
11.0 p.m.
On the question whether the regulator should be used in the next few months, I believe that the hon. Member for Scarborough and Whitby has made no case whatsoever for saying that we are moving into a situation when the Chancellor should use it, even if there were not the objections to it which have been made from this side. I feel very strongly about this. The hon. Member for Scarborough and Whitby tried to give the impression that we are moving rapidly into a situation of very inflationary demand. There is no evidence whatsoever of this. Of course, the hon. Member can project different kinds of demands and say that in six months' or a year's time these added up may exceed any possible increase in capacity. This is a projection which many people have done. The Chancellor did it before he produced his Budget.
But it is inadmissible to say that there is any clear sign that this is already happening. It still remains purely a projection into the future. It is a guess about the future. What we know about the present situation gives an absolutely different impression, because what we know about the present position is mainly the fact that production is still roughly where it was a year ago. It may have started to rise now. Government figures inevitably come out a little late. I daresay it has started to rise now, but on the last available Government figures production is no higher than it was a year ago. Unless it is thought that we have had no increase in capacity or efficiency in the last twelve months, this must suggest that there is still some reserve in the system and that we are far from being pushed right up against our ceiling.
The Chancellor must take this view because he produced his Budget when production was roughly the same as it is today, and he was then obviously assuming an increase of from 3 per cent. to 4 per cent. in output over the following twelve months. We have scarcely yet started on that increase which he assumed in his Budget speech. This must suggest that we are very far from the position of excess demand. This does not mean that we may not have serious difficulties with sterling and the balance of payments in the autumn. It looks very likely that we shall. It means that those difficulties will have nothing whatsoever to do with excess demand. They will be due to some basic long-term un-competitiveness of British goods exaggerated, perhaps by a loss of confidence.
If we reach that situation in the autumn—I strongly hope that we shall not—I implore the right hon. and learned Gentleman to resist the temptation and advice which is being and will be given to him to deal with it by a regulator which is adapted to an utterly different situation. He will have to take measures—they may be disagreeable—to deal with the situation, but using this regulator to curb excess demand will be completely irrelevant.
Despite the surprisingly enthusiastic screeches of two of his hon. Friends tonight, perhaps the Chancellor has been

influenced by the very hostile reception which this regulator has received. It has received a much more hostile reception than that accorded to the first of his two regulators. The hostility has come not only from this side of the Committee, but from the unions, from many manufacturers, and from most of the outside commentators, even those who at one stage positively wanted a payroll tax. On the whole, amongst informed circles this regulator has had an extremely bad reception, on the ground that there are far too many different motives for it, so that no single objective will be achieved.
I hope very much that the Chancellor will be influenced by these criticisms, and that, whatever he does about his other regulator, will in practice firmly drop this one.

The Temporary Chairman (Sir Samuel Storey): Mr. Bennett.

Mr. Barber: Sir Samuel, would it be for the convenience of the Committee if I said something?

The Temporary Chairman: I called Mr. Bennett.

Mr. F. M. Bennett: I can reassure the Economic Secretary. I shall not prevent him for more than two minutes from saying whatever he wanted to say. My forbearance in this respect is entirely due to my consideration for my colleagues. [An HON. MEMBER: "And the Chief Whip."] Not for the Patronage Secretary, who would have wished me not even to speak for the two minutes I intend to speak. I am trying very hard to be forbearing. I was going to say that my strictly limited remarks are due to my forbearance for my colleagues and not for hon. Gentlemen opposite, who have spent days jeering at my hon. Friends for not saying anything at all.
I confess that I have always been in favour of the idea of a payroll tax in theory. But I must also say, lest there be any misunderstanding, that I am not an enthusiastic supporter of this interpretation of a payroll tax. Perhaps I should declare an interest in that in not one of the companies with which I am associated have I found one enthusiastic voice in favour of this particular type or scale of payroll tax. That is


not because I or those whose confidence I share dislike the idea of a payroll tax in theory, but because if the proposed type is introduced it will not be big enough to be effective for the purpose of the redistribution of labour. On this point alone it would be endless repetition for me to go into all the details. But to think that, with earnings of between £12 and £20 a week for 4s. a week extra, an employer will be caused to change his whole labour policy is simply not true.
Not only is it not large enough to be effective but, if it is applied, it will not be selective. Hon. Members have heard a variety of reasons why this tax may have to be imposed, the first being for the economic redistribution of labour. Another aim is that it should curtail a certain amount of purchasing power. I suppose that that may be the case, since it will raise a certain amount of money for the Exchequer which otherwise might be spent.
But in the form in which the tax is at present proposed, I cannot see that it will be effective even in that sphere because I feel that it may well result in raising prices and may lead to one of the precise evils which we are trying to cure.
I wish I could be an enthusiastic supporter of this tax in its present form, but although I like the idea in theory, I hope that the Chancellor will find some method of overcoming some of the difficulties I have mentioned and, if he cannot overcome them, not find it necessary to introduce it between now and his next Budget.

Mr. E. Fernyhough: I would not have intervened in this debate had it not been for the speeches of the hon. Member for Scarborough and Whitby (Sir A. Spearman) and the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti).
The hon. Member for Scarborough and Whitby spoke of the history of the 40's. We all remember, as I hope the Chancellor does, those years. I hope the Chancellor will appreciate and understand just how wise and sensible and tolerant the Opposition are towards him these days, compared with the treatment Sir Stafford Cripps had meted out to him when he was the Chancellor.
There are rumours abroad—and I refer to them because of what was said by the hon. Member for Scarborough and Whitby—that Britain may be considering devaluation. [HON. MEMBERS: "Rubbish."] The hon. Member for Scarborough and Whitby should remember the days when hon. Gentlemen opposite were sitting on these benches and when they were asking the then Chancellor when he was going to devalue.

Mr. Nabarro: He denied it.

Mr. Fernyhough: What else could he do? If we put the same questions to the Chancellor today as were put to Sir Stafford Cripps on the point raised by the hon. Member for Scarborough and Whitby we know that the present Chancellor would give precisely the same reply as that given by Sir Stafford Cripps. The only difference is that we have a little more regard for the financial wellbeing of our country abroad, and we are not prepared to embarrass the Chancellor when his difficulties are heavy enough without our adding to them.
The hon. Member for Morecambe and Lonsdale was quite honest about it. He said that what was good for Ferranti was good for Britain. Many people do not agree with that idea. Ferranti produces machinery which dispenses with labour. The hon. Member has no social regard for what happens to the labour. Some of us, while prepared to allow Ferranti to go ahead, are very anxious about what happens to those men. Ferranti may dismiss men, and that may be all right in the company's view, but we are concerned to ensure that the men displaced have jobs to go to and are not thrown on the scrap heap.

Mr. de Ferranti: The hon. Member has missed the point. We have all been getting richer because of this process during the past 150 years. This is why the standard of living is going up.

Mr. Fernyhough: This is wonderful. I should not have referred to the hon. Member at all if he had not chided us on these benches about our attendance here. There may be some people in the House who are entitled to chastise us on this side of the Committee about our attendance, but the hon. Member for Morecambe and Lonsdale is not one of them. It is not for him to talk of thin


attendances. We see him as frequently as we see Good Fridays—not very often. [Interruption.] When the hon. Member for Kidderminster (Mr. Nabarro) has finished muttering, I shall proceed. [An HON. MEMBER: "He is ill."] I know he is, and he has our sympathy, but I wish he would not interrupt.
I oppose this tax because it is completely undiscriminating. The average output per manshift in the coal industry is now about 26 or 27 cwt. If this tax goes on, there will probably be a 3s. rise in the average price of coal per ton. That is inevitable. It is a simple calculation. The National Coal Board is having the utmost difficulty in keeping out of the red. Does the Chancellor think that it is decent or helpful if the Government, who are responsible for the industry, now make matters more difficult for the Coal Board in its efforts to strike even?
The difference between the impact of the tax on the coal industry and its impact on the steel industry is obvious. For the steel industry, it would not matter if it were £4 a week per man. The wages cost per ton of steel is insignificant. In the coal industry, wages costs represent a considerable percentage.

Mr. Nabarro: Sixty-two.

Mr. Fernyhough: Yes, 62 per cent. Anything which adds to that 62 per cent. makes the problem of the National Coal Board more difficult.

Mr. Nabarro: The hon. Gentleman's arithmetic is wrong.

11.15 p.m.

Mr. Fernyhough: The Chancellor has no right to introduce an indiscriminate tax of this kind which will make more difficult the future progress of very desirable industries.
Did the Chancellor consider, before deciding to introduce this tax, what its impact was going to be on taxation and the need to increase allocations to local authorities? It is obvious that the 4s. will have to be charged for every Civil Servant, every member of the Armed Forces, every teacher, and every local authority employee. That is a bill which the Chancellor will have to meet. He creates it and he will have to meet it.
What is so funny is that everyone gets very agitated about the pay demands of the workers. If there is, as my hon. Friend the Member for Grimsby (Mr. Crosland) said, a demand for a wage increase, everyone holds up his hands in horror and says it will mean inflation and economic difficulties. But what is the difference, as far as our export trade and our internal trade are concerned, between this tax and an increase in wages?
The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) wanted an assurance that the Chancellor would not spend the increase in revenue on increased Civil Estimates. Indeed, the noble Lord wanted something more: he wanted the Chancellor to reduce the Estimates by the £210 million he was going to collect. But he did not say which of the Estimates he would decrease. We would be glad to know. Would the noble Lord take it out of agricultural subsidies? If he is asking for this reduction we are entitled to know from where he would take it. I do not think the noble Lord will get an answer from the Chancellor, and I shall not get an answer from the noble Lord.
This tax shows that the Chancellor does not know where he is going. He is treading a road which is not signposted, and he is not sure what the end is going to be. I know what we would like to think the end is going to be. This tax is being introduced in order, if necessary, to get men sacked. Make no mistake about it, when there is talk of transferring labour, the purpose is to get men sacked. I am not against certain people being out of work. I say quite frankly that I pray for the day when everyone sitting opposite is out of work as far as membership of the House is concerned.

Mr. Barber: We have had, I think the Committee will agree—

Mr. Geoffrey Hirst: On a point of order, Sir Samuel. Can we assume that this premature call of the Economic Secretary is not going to curtail the debate?

The Temporary Chairman: That is not a point of order.

Mr. John Eden: Further to that point of order, Sir Samuel—

The Temporary Chairman: The hon. Member cannot pursue what is not a point of order.

Mr. Eden: On another point of order. May I ask whether it is intended to conclude the debate on this Clause after my hon. Friend has spoken, or will it continue if other hon. Members rise to speak?

The Temporary Chairman: That is not a point of order.

Mr. Barber: As we have debated this Clause for more than seven hours, I thought it would be useful if I intervened and said a few words about the general principles and answered some of the points which have been raised. We have had a full debate on a series of Amendments which the right hon. Member for Huyton (Mr. H. Wilson) rightly said dealt with somewhat narrow points; but which I think I can say without disrespect to the Chair were treated by hon. Members on a somewhat wider basis.
Since then we have spent a fair time on this Motion. I should like first to refer to a point on which I think the Committee will be in general agreement. As was pointed out by my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman), one of the fundamental problems which has repeatedly confronted successive Governments since the end of the war has been the lack of balance in the economy between demand and resources. Labour Governments and Conservative Governments alike have grappled with this problem with varying degrees of success and by different means. The right hon. Member for Huyton said that there may be times when it is necessary to siphon off excessive purchasing power. So, whatever difference there may be in approach, I think the responsibility of the Government to intervene in the general interests of the economy is accepted by all.

Mr. H. Wilson: Will the hon. Gentleman quote me fairly? In the next sentence I said that this is not such a time.

Mr. Barber: I went on, after quoting what the right hon. Gentleman had said, to say—as he would know, had he done me the courtesy of listening to what I was saying—that there is no disagree-

ment, I hope, that it is the responsibility of the Government to intervene if the circumstances demand it. After all, my right hon. and learned Friend is not seeking to impose the employers' surcharge now. But he is seeking power to impose it if it becomes necessary, as the right hon. Member for Huyton said, to siphon off excessive purchasing power. So what it boils down to is that though there are differences of opinion within the Committee as to how this should be done—under a Labour Government there was a greater reliance placed on fiscal controls than under Conservative Governments, and some hon. Members opposite still favour some form of fiscal controls, import controls for example, and others do not—since 1951 we have placed greater reliance on monetary controls. But my right hon. and learned Friend has never concealed from the Committee the fact that these controls have serious disadvantages. Indeed, he alluded to those disadvantages this afternoon.
I will not weary the Committee by going over the disadvantages of the Bank Rate and hire-purchase controls which have been referred to, except to recall that the right hon. Member for Huyton castigated this proposal as being a blunt instrument. But I think that he would also agree that in so far as hire purchase bears on certain industries that also has an element of bluntness about it. Of course, the Budget suffers from the disadvantage that normally it is an annual affair.
My right hon. and learned Friend has searched for new means of influencing the balance of the economy which may in certain circumstances involve less reliance on the more traditional methods, and also, in some respects, so far as timing is concerned for example, be more flexible than other methods. This surcharge which the Committee is now considering is one of those methods.
Whether one agrees with the particular method or not the basic principle involved is not so novel, as hon. Members will see if they care to remind themselves of the contents of the 1944 White Paper on employment policy. The first thing to appreciate is that although, as my right hon. and learned Friend said when making his Budget statement, this surcharge is analogous to a payroll tax, it


is not a payroll tax as that term is normally understood. A payroll tax certainly is a tax which is imposed primarily for purposes other than regulating the level of demand, whereas the regulation of the level of demand is the primary purpose of this proposal.
A good deal has been said about a payroll tax proper, in particular in what, I am sure, all my hon. Friends will agree, was the very thoughtful speech of my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti). He was right in suggesting that a surcharge of a maximum of 4s. a week in respect of each employee would have little more than an incidental effect on the economic use of manpower and investment in labour-saving equipment. The hon. Member for Newton (Mr. Lee) based almost the whole of his speech earlier this afternoon on the assumption that the main purpose of this employers' Stir-charge was to encourage economy in the use of labour, but his right hon. Friend the Member for Huyton said a short time ago that he did not think that this would discourage the hoarding of labour.
I should like to make it plain once again, in view of what was said by the hon. Member for Jarrow (Mr. Fernyhough) that certainly it is not the primary purpose of this employers' surcharge to encourage the economic use of labour. That is an incidental effect.
A permanent payroll tax, however, of the nature mentioned by my hon. Friend the Member for Morecambe and Lonsdale would need a good deal more thinking about. One would have to consider whether the tax should be varied as between industries or between types of employees, such as, for example, the disabled, who are referred to by the hon. Member for Southampton, lichen (Dr. King). As my hon. Friend the Member for Morecambe and Lonsdale rightly said, a permanent payroll tax would have to be considered in relation to other forms of taxation, such as Profits Tax.
My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) asked about the use of the proceeds of this employers' surcharge. I hope that I may answer him in this way. The effect of imposing the surcharge would be to

increase the Budget surplus above the line and, consequently, to reduce or, in certain cases, to eliminate the borrowing requirement. For example, the borrowing requirement this year is £69 million. Consequently, if the employers' surcharge were imposed for a period of six months, that would more than eliminate the borrowing requirement altogether. In other words, the effect of imposing the surcharge would be either to make the increase in the National Debt less than it would otherwise have been, or to enable the Government to reduce the National Debt by more than otherwise would have been possible.
Concerning the question of Government expenditure, to which my noble Friend referred, the receipts from the employers' surcharge will come in to the Exchequer in the same way as any other taxation receipts, but there will be this significant difference. As the whole purpose of imposing the employers' surcharge would be to withdraw money from the economy, I assure my noble Friend that it follows that it would be quite inconsistent, and certainly not the intention of my right hon. and learned Friend, to use these additional receipts for additional Government expenditure.
I was going to say something about the temporary nature of this tax and about the machinery and the disadvantages of the machinery which we have adopted, but there is, perhaps, only one other point on which I should say a brief word. The Committee is now fully aware of the implications of using the National Insurance machinery and I need not go over that ground again.
11.30 p.m.
The hon. Member for Itchen and one or two others, including the hon. Member for Jarrow, have referred to the possible effect of this employers' surcharge on employment. The hon. Member for Itchen said the Clause might induce employers to get rid of workers. I cannot conceive of this regulator being used in circumstances other than those which included a severe shortage of labour and in those circumstances I agree with my hon. Friend the Member for Torquay (Mr. F. M. Bennett) that a maximum charge of 4s. per week in respect of each employee simply would not have the dire consequences on employment that


have been suggested. I say in all sincerity that if it would have the dire consequences suggested then presumably those hon. Members opposite who represent Scottish constituencies and who have taken part in the debate would be equally opposed to a 4s. increase in earnings. It seems to me that the same principles apply.
This employers' surcharge is not meant as a substitute for a payroll tax. Secondly, the Chancellor has never concealed from the Committee that the method which he has adopted has disadvantages. For that reason he has said right at the outset that this is only a temporary expedient, that he is seeking powers only for one year, and that he is considering possible alternative procedures for the future.
Lastly, none of the existing methods of obtaining a balance in the economy are without defects and disadvantages and no economic regulator, either this or any future one that may be conceived, is likely to be painless in its operation. But this power for which my right hon. and learned Friend is asking for one year will add to his ability to maintain the balance between demands and resources, which must be to the advantage of the economy and therefore to the prosperity of the country, and I commend the Clause to the Committee.

Mr. H. Wilson: It is quite clear that whatever argument will be deployed the Government will not budge on this Clause. It is clear that, however, unpopular it is and however impracticable, as shown by speeches in all parts of the Committee, the Chancellor feels committed to the Clause, rightly or wrongly. In the famous words of Lord Attlee, he has nailed his trousers to the mast and he cannot climb down. I therefore suggest, particularly since we have a very important related Schedule to come to, on which many of these arguments can be continued, especially the argument on Parliamentary control, that we might now reach a conclusion on the Clause. We on this side of the Committee propose to take the matter to the Division Lobby.

Mr. Eden: I am sorry further to delay the opportunity of the right hon. Member for Huyton (Mr. H. Wilson) to march with his faithful few to the Division Lobby tonight before they disperse

to their various bus stops on their homeward journey, but I should like to say a few words and I am grateful to you, Sir Gordon, for having called me.

Mr. Elwyn Jones: Did the hon. Member say "bus stops"? Is that regarded as a term of abuse or not?

Mr. Eden: In view of the fact that the hon. and learned Member no doubt supported my right hon. and learned Friend in making it impossible for a larger number of people to occupy themselves in driving round the town in Rolls-Royces, I suppose that hon. Members opposite must find other means.

The Chairman (Sir Gordon Touche): Order. I would remind the hon. Member that the Question is "That the Clause stand part of the Bill."

Mr. William Hamilton: It is time that the hon. Member for Bournemouth, West (Mr. Eden) was in bed.

Mr. Eden: The right hon. Member for Smethwick (Mr. Gordon Walker) appears to be saying something. Did he wish to speak?

Mr. Gordon Walker: I said that the remark make by the hon. Member for Bournemouth, West (Mr. Eden) was a beastly, snobbish remark.

Mr. Eden: It may be snobbish to anybody who comes from the Hampstead set.
If one takes this tax by itself and examines the application of it to selected industries and businesses, I think that one may be forgiven for regarding it as serious. [Interruption.] Time and again hon. Gentleman opposite have kept the Committee sitting until far into the night to suit their own purposes.

The Chairman: The hon. Member must confine his remarks to the Question "That the Clause stand part of the Bill."

Mr. Eden: If I may be permitted to make—[Interruption.] I am not going to be stampeded into anything, and I am content that hon. Gentlemen opposite should stay here for as long as I am prepared to make them do so. It is entirely up to hon. Gentlemen opposite.
The right hon. Member for Huyton, who has already made two speeches on this Question, should extend a little courtesy to hon. Members who are trying to speak for the first time in this debate. If hon. Gentlemen do not wish to listen to what I have to say, they can leave the Chamber.
If one takes this tax by itself and applies it to individual industries and businesses, such as has been done by a number of hon. Members, I think one may be forgiven for regarding its effect as likely to be serious. Certainly if one examines the consequences to teachers, to schools, to farmers, and to local authorities, as individuals, it could be regarded as a serious imposition.
I am thinking of my local authority which might find itself having to face an increase of £50,000 on its employment bill, which would be the product of a 3d. rate. That is not something which can be lightly passed by. If one regards it in that light, it is something which should cause one a certain amount of concern.
Equally, I accept what my hon. Friend said, that this is not designed to try to produce greater efficiency in the use of labour. I think that in his Budget speech my right hon. and learned Friend indicated that this was one of the possible by-products of the imposition of a tax of this kind, but nobody in industry will be worried by an increase of 4s. per head on his employment bill.
I do not accept what the hon. Member for Jarrow (Mr. Fernyhough) said, This will not result in unemployment being deliberately created. This is not designed to try to create unemployment. No employer of labour will want to disband a labour force which has cost him a lot to bring together, as any hon. Members who were associated with the motor car industry during its recent difficult stage well know to be the case.
It is important to look at this tax in the context of the other provisions in the Budget, particularly of the other surcharge provision in Clause 8. If the provision in Clause 8 is implemented—this, I believe, is certainly the intention of my right hon. and learned Friend—and if he imposes the increased Excise Duties which he will have the power to do under the Bill, and which I think he

should certainly do before the House rises for the Summer Recess, we shall see the possible consequence of that on the wages of employed people. Were my right hon. and learned Friend to implement the powers which he has under Clause 8 then I believe that it might give a fresh impetus to wage demands.
There are already sufficient wage demands in train for later this year. If under Clause 8 increased charges are imposed on a whole range of Excise Duties and Purchase Tax they may well result, as I say, in giving a fresh impetus to wage demands. I think that Clause 26 provides an essential weapon with which my right hon. and learned Friend must equip himself in order to ensure that employers are made fully aware that they cannot go on, year after year, acceding to the demands of labour for increased wages, thereby adding to the inflationary effect on the economy of the country.
I hope, therefore, that my right hon. and learned Friend will not be dismayed by any criticisms which may have been directed to the application of this tax to individual industries but that he will bear in mind the relationship of the tax to his bringing into effect the surcharge on the Excise Duties and thus enable the hands of those who negotiate on behalf of employers in industry to be strengthened in resisting a further inflationary round of demands for wage increases.

Mr. Hirst: In all the circumstances, I do not propose to keep the Committee for more than a few minutes, although I rather deprecate the circumstances themselves. After all, this is an extremely important matter. We have had a very short discussion indeed on the Question "That the Clause stand part of the Bill," and I do not think that on a Clause of such importance as this one we should always be at the mercy of the whims and fancies of those who arrange our affairs. This is a Clause about which many of us feel very keenly indeed.
I rise to support my right hon. and learned Friend, though in my experience I do not remember an occasion when that desire has been made more difficult than it is tonight. I deprecate very much indeed that it should be so. That


is my main reason for saying a word or two on the Clause. I have listened to a great deal of this debate and many important subjects have been discussed, though not actually on the Question "That the Clause stand part of the Bill," which is the important thing.
What are the major considerations? I think that my hon. Friend the Economic Secretary to the Treasury made a very fair speech indeed when he pointed first to the very marked difference between what is being called the payroll tax and what is, in fact, the classic understanding of a payroll tax. My hon. Friend also referred—and quite rightly, I think—rather strongly to the arguments put forward by hon. Members opposite to the effect that this tax was a blunt instrument. I join absolutely with my hon. Friend the Economic Secretary and other of my hon. Friends in saying that we prefer the economic regulators in this Budget to those which we have previously had. We think that they are an improvement on the earlier ones.
I join, of course, with all hon. Members in hoping that the payroll tax will not have to be imposed. I do so, firstly, because the very circumstances which would make its imposition necessary would be such that we should all deprecate, and, secondly, because I do not think that such an instrument as the payroll tax should be used unless there

is great need to do so. I do not like it, but my right hon. and learned Friend, in his Budget and in the general economic circumstances, has shown great courage all round and he deserves the support of the House and the country.

It is vitally important that those of us who travel abroad a good deal—as I do, in a humble capacity—and meet those in influential positions, should always take care to divide our criticism between domestic issues, on certain of which I am not backward in criticising the Government, and those issues which are of national import, when we must be very sure of our facts before we damage the reputation of this country—and we are damaging it if we undermine confidence. If we feel justified in doing so we should do so, but we must be very sure and not play a political game. I am not sure of the facts; far more sure am I in saying that my right hon. and learned Friend has judged rightly in reserving for his use this instrument, which he feels it may be necessary to use in order to maintain that confidence.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 195, Noes 131.

Division No. 199.]
AYES
[11.45 p.m.


Agnew, Sir Peter
Cordeaux, Lt.-Col. J. K.
Green, Alan


Aitken, W. T.
Cordle, John
Gresham Cooke, R.


Allan, Robert (Paddington, S.)
Corfield, F. V.
Grosvenor, Lt.-Col. R. G.


Allason, James
Courtney, Cdr. Anthony
Gurden, Harold


Ashton, Sir Hubert
Critchley, Julian
Hamilton, Michael (Wellingborough)


Barber, Anthony
Curran, Charles
Harris, Frederic (Croydon, N. W.)


Barter, John
Currie, G. B. H.
Harris, Reader (Heston)


Bennett, F. M. (Torquay)
d'Avigdor-Goldsmid, Sir Henry
Harrison, Brian (Maldon)


Berkeley, Humphry
Deedes, W. F.
Hay, John


Bldgood, John C.
de Ferranti, Basil
Heald, Rt. Hon. Sir Lionel


Biggs-Davison, John
Digby, Simon Wingfield
Hendry, Forbes


Bishop, F. P.
Doughty, Charles
Hiley, Joseph


Bourne-Arton, A.
Duncan, Sir James
Hill, Dr. Rt. Hon. Charles (Luton)


Box, Donald
Eden, John
Hill, Mrs. Eveline (Wythenshawe)


Boyle, Sir Edward
Elliot, Capt. Walter (Carshalton)
Hill, J. E. B. (S. Norfolk)


Braine, Bernard
Elliott, R. W. (Nwcstle-upon-Tyne, N.)
Hinchingbrooke, Viscount


Brawis, John
Emery, Peter
Hirst, Geoffrey


Bromley-Davenport, Lt.-Col. Sir Walter
Errington, Sir Eric
Hocking, Philip N.


Brown, Alan (Tottenham)
Farr, John
Hollingworth, John


Buck, Anthony
Finlay, Graeme
Hopkins, Alan


Bullard, Denys
Fraser, Ian (Plymouth, Sutton)
Hornby, R. P.


Butcher, Sir Herbert
Gardner, Edward
Howard, John (Southampton, Test)


Campbell, Gordon (Moray &amp; Nairn)
Gibson- Watt, David
Hughes-Young, Michael


Carr, Compton (Barons Court)
Glover, Sir Douglas
Hutchison, Michael Clark


Carr, Robert (Mitcham)
Glyn, Dr. Alan (Clapham)
Jackson, John


Channon, H. P. G.
Goodhart, Philip
James, David


Chataway, Christopher
Goodhew, Victor
Johnson, Dr. Donald (Carlisle)


Clark, William (Nottingham, S.)
Gower, Raymond
Johnson, Eric (Blackleg)


Cleaver, Leonard
Grant, Rt. Hon. William
Johnson Smith, Geoffrey


Cooke, Robert
Grant-Ferris, Wg Cdr. R.
Jones, Rt. Hn. Aubrey (Hall Green)




Kerans, Cdr. J. S.
Pannell, Norman (Kirkdale)
Steward, Harold (Stockport, S.)


Kerby, Capt. Henry
Partridge, E.
Stodart, J. A.


Kerr, Sir Hamilton
Pearson, Frank (Clitheroe)
Stoddart-Scott, Col. Sir Malcolm


Kershaw, Anthony
Peel John
Studholme, Sir Henry


Langford-Holt, J.
Pickthorn, Sir Kenneth
Sumner, Donald (Orpington)


Leavey, J. A.
Pilkington, Sir Richard
Talbot, John E.


Lewis, Kenneth (Rutland)
Pitman, Sir James
Taylor, Edwin (Bolton, E.)


Lilley, F. J. P.
Pott, Percivall
Temple, John M.


Litchfield, Capt. John
Price, David (Eastleigh)
Thomas, Leslie (Canterbury)


Lloyd, Rt. Hon. Selwyn (Wirral)
Prior, J. M. L.
Thornton-Kemsley, Sir Colin


Longbottom, Charles
Prior-Palmer, Brig. Sir Otho
Tiley, Arthur (Bradford, W.)


Longden, Gilbert
Proudfoot, Wilfred
Turner, Colin


Loveys, Walter H.
Pym, Francis
Turton, Rt. Hon. R. H.


Lucas-Tooth, Sir Hugh
Quennell, Miss J. M.
Vaughan-Morgan, Rt. Hon. Sir John


MacArthur, Ian
Ramsden, James
Wakefield, Edward (Derbyshire, W.)


McLaren, Martin
Rawlinson, Peter
Wakefield, Sir Wavell (St. M'lebone)


Maclean, Sir Fitzroy (Bute &amp; N. Ayrs.)
Redmayne, Rt. Hon. Martin
Walder, David


Maddan, Martin
Rees, Hugh
Walker, Peter


Maginnis, John E.
Rees-Davies, W. R.
Wall, Patrick


Markham, Major Sir Frank
Renton, David
Ward, Dame Irene


Marten, Neil
Ridley, Hon. Nicholas
Webster, David


Matthews, Gordon (Meriden)
Ridsdale, Julian
Wells, John (Maidstone)


Mawby, Ray
Roberts, Sir Peter (Heeley)
Whitelaw, William


Maxwell-Hyslop, R. J.
Robinson, Sir Roland (Blackpool, S.)
Williams, Dudley (Exeter)


Mills, Stratton
Roots, William
Williams, Paul (Sunderland, S.)


Montgomery, Fergus
Ropner, Col. Sir Leonard
Wilson, Geoffrey (Truro)


More, Jasper (Ludlow)
Scott-Hopkins, James
Wise, A. R.


Morgan, William
Seymour, Leslie
Wolrige-Gordon, Patrick


Nabarro, Gerald
Sharples, Richard
Woodhouse, C. M.


Noble, Michael
Shaw, M.
Woodnutt, Mark


Nugent, Sir Richard
Shepherd, William
Woollam, John


Orr, Capt. L. P. S.
Simon, Rt. Hon. Sir Jocelyn
Worsley, Marcus


Osborn, John (Hallam)
Skeet, T. H. H.



Osborne, Sir Cyril (Louth)
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
TELLERS FOR THE AYES:


Page, John (Harrow, West)
Smithers, Peter
Colonel Sir Harwood Harrison and


Page, Graham (Crosby)
Spearman, Sir Alexander
Mr. Chichester Clark.




NOES


Ainsley, William
Hamilton, William (West Fife)
Parkin, B. T.


Albu, Austen
Hannan, William
Pavitt, Laurence


Allen, Scholefield (Crewe)
Hart, Mrs. Judith
Popplewell, Ernest


Awbery, Stan
Hayman, F. H.
Prentice, R. E.


Bacon, Miss Alice
Henderson, Rt. Hn. Arthur (Rwly Regis)
Price, J. T. (Westhoughton)


Baxter, William (Stirlingshire, W.)
Herbison, Miss Margaret
Probert, Arthur


Blyton, William
Hill, J. (Midlothian)
Roberts, Albert (Normanton)


Bowden, Herbert W. (Leics, S. W.)
Holman, Percy
Robertson, John (Paisley)


Bowen, Roderic (Cardigan)
Houghton, Douglas
Rogers, G. H. R. (Kensington, N.)


Braddock, Mrs. E. M.
Hoy, James H.
Ross, William


Broughton, Dr. A. D. D.
Hughes, Cledwyn (Anglesey)
Silverman, Julius (Aston)


Brown, Rt. Hon. George (Belper)
Hynd, John (Attercliffe)
Silverman, Sydney (Nelson)


Callaghan, James
Jay, Rt. Hon. Douglas
Slater, Mrs. Harriet (Stoke, N.)


Cliffe, Michael
Jeger, George
Slater, Joseph (Sedgefield)


Corbet, Mrs. Freda
Jenkins, Roy (Stechford)
Small, William


Craddock, George (Bradford, S.)
Johnson, Carol (Lewisham, S.)
Smith, Ellis (Stoke, S.)


Cronin, John
Jones, Rt. Hn. A. Creech (Wakefield)
Snow, Julian


Crosland, Anthony
Jones, Dan (Burnley)
Spriggs, Leslie


Cullen, Mrs. Alice
Jones, Elwyn (West Ham, S.)
Steele, Thomas


Darling, George
Kelley, Richard
Stewart, Michael (Fulham)


Davies, G. Elfed (Rhondda, E.)
King, Dr. Horace
Stonehouse, John


Davies, Ifor (Gower)
Lawson, George
Stones, William


Delargy, Hugh
Lee, Frederick (Newton)
Sylvester, George


Diamond, John
Lee, Miss Jennie (Cannock)
Symonds, J. B.


Dodds, Norman
Lewis, Arthur (West Ham, N.)
Taylor, Bernard (Mansfield)


Donnelly, Desmond
Logan, David
Thompson, Dr. Alan (Dunfermline)


Driberg, Tom
Loughlin, Charles
Thornton, Ernest


Edelman, Maurice
Mahon, Dr. J. Dickson
Ungoed-Thomas, Sir Lynn


Evans, Albert
McCann, John
Wainwright, Edwin


Fernyhough, E.
McInnes, James
Warbey, William


Fitch, Alan
Mackie, John (Enfield, East)
Weitzman, David


Fletcher, Eric
MacPherson, Malcolm (Stirling)
Whitlock, William


Foot, Dingle (Ipswich)
Mallalieu, E. L. (Brigg)
Wigg, George


Foot, Michael (Ebbw Vale)
Manuel, A. C.
Wilkins, W. A.


Forman, J. C.
Mapp, Charles
Willey, Frederick


Fraser, Thomas (Hamilton)
Marquand, Rt. Hon. H. A.
Williams, Ll. (Abertillery)


Galpern, Sir Myer
Mendelson, J. J.
Willis, E. G. (Edinburgh, E.)


George, Lady Megan Lloyd (Crmrthn)
Millan, Bruce
Wilson, Rt. Hon. Harold (Huyton)


Ginsburg, David
Milne, Edward J.
Winterbottom, R. E.


Gordon Walker, Rt. Hon. P. C.
Mitchison, G. R.
Woof, Robert


Gourlay, Harry
Monslow, Walter
Yates, Victor (Ladywood)


Grey, Charles
Neal, Harold



Griffiths, Rt. Hon. James (Llanelly)
Noel-Baker, Francis (Swindon)
TELLERS FOR THE NOES:


Hale, Leslie (Oldham, W.)
Oram, A. E.
Mr. Charles A. Howell and


Hall, Rt. Hn. Glenvil (Colne Valley)
Oswald, Thomas
Mr. Irving.

Third Schedule.—(SUPPLEMENTARY PROVISIONS AS TO ORDERS UNDER SS. 8 AND 26.)

Mr. G. R. Mitchison: I beg to move, in page 33, line 43, to leave out "twenty-eight" and to insert "seven".
Perhaps with that Amendment I can refer to the two following Amendments, in page 33, line 44, leave out "twenty-eight" and insert "seven", and in page 34, leave out lines 1 to 4.
In view of what the right hon. and learned Gentleman said earlier, it appears that he is going to concede, at any rate, the principle of the last Amendment, which means the reckoning of time by calendar time and not merely by time during which Parliament is sitting, and that as regards the two other Amendments which seek to substitute seven days duration for twenty-eight days duration before confirmation by Parliament, he is willing to make some concession the nature of which at present I do not know.
I hope, therefore, that the right hon. and learned Gentleman will help us by telling us immediately what he is going to do on those two matters, and if the result is satisfactory we may be able to come to an agreement, or at least to defer further discussion.

Mr. Selwyn Lloyd: I have given careful consideration to these Amendments and to the proposal which has been made. I think there is a very important point here. In asking Parliament to give the Chancellor of the Exchequer or the Government of the day powers so extensive as these it is important to try to preserve the rights of Parliament.
I would have been prepared to accept the third Amendment—in other words, to deal with this in terms of calendar days and not Parliamentary sitting days. I should have thought in all the circumstances that a period of 28 days would not be unreasonable. I think there is a completely different consideration given to it if one concedes that it should be calendar days and not sitting days, and I should have thought that in this hypothetical circumstance it would be for the convenience of all concerned—because a certain amount of notice has to be given and it will take some time

for the House to be recalled if it is in recess—that the period should be 28 days. I would be prepared to accept an Amendment, as I say, limiting this matter to 28 calendar days.

Mr. Mitchison: In the "grandfathers' war" I once went to market to buy a pig for Army purposes and there was a haggle about this animal which proceeded on traditional lines. I am inclined to think that the point about seven days and 28 days to that extent partakes of the character of a haggle about a pig.
I doubt if we should insist on the seven days, but, on the other hand, we do regard 28 days as too long. What I suggest we might do for the moment is, first of all, to thank the right hon. and learned Gentleman, as I do, for accepting the third Amendment and, secondly, for the moment to let the earlier Amendment pass, but on the understanding that we return to it on Report unless the right hon. and learned Gentleman can see his way to make some concession in what for this purpose I am calling the price of the pig.

Mr. Lloyd: Without entering into all the details of pig purchasing or selling, I am certainly prepared to consider this matter again. One wants to do what one can for the convenience of Parliament. The main point is the concession that I have made, that it should be calendar days, and not sitting days. I will certainly between now and Report think again about this period with not too closed a mind.

Mr. Mitchison: I am grateful to the right hon. and learned Gentleman. He will be most grateful to me for not having talked about the constitutional importance of this question, which really is considerable.
12 m.
Before asking leave to withdraw the Amendment, I would say that I do not ask to move the second Amendment, but I shall ask to move the third one which, in view of what the right hon. and learned Gentleman said, seems likely to be accepted.
I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 34, leave out lines 1 to 4.—[Mr. Mitchison.]

Schedule, as amended, agreed to.

Schedule 5 agreed to.

To report Progress and ask leave to sit again.—[Mr. Selwyn Lloyd.]

Committee report Progress; to sit again this day.

Orders of the Day — CAPTAIN GALVAO (VISA)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gibson-Watt.]

12.1 a.m.

Mr. Michael Foot: I wish to raise the question of the refusal of a visa to Captain Galvao, a matter which was brought to the attention of the House by my hon. Friend the Member for Wednesbury (Mr. Stonehouse) in a Question to the Home Department on 1st June. Captain Galvao has recently won fame by the exploit of the "Santa Maria," but I think that I should refer briefly to the previous claims which he had to be a famous figure, because he had played a considerable part in the politics of Portugal for many years. Originally he was a supporter of the Dictator Salazar in Portugal and helped him to get into power in 1926. He served in many prominent positions in Portugal. In 1947 he was sent out to Angola to conduct an inquiry into conditions there. He brought back a report which made very strong criticisms of what was happening in Angola. I pause to remark that, if Captain Galvao's report on Angola had received more attention from the Portuguese Government at that time, many lives might have been saved in Angola subsequently.
However, Captain Galvao was refused the right to divulge his findings about Angola to the Portuguese Assembly. Instead, he was charged with subversion and put in prison first on a sentence of three years. He still continued to preach the doctrines in which he believed, and he was subsequently, I think in 1958, sentenced to imprisonment for a further period of sixteen years. Taking that record of Captain Galvao and his part in Portuguese politics, at any rate on the face of it, it can be said that he is the kind of person whom the British

Government, if they had any interest in freedom, would prefer to associate with rather than Dictator Salazar.
Captain Galvao escaped from his imprisonment and found asylum in the Argentine Embassy in Lisbon. I pay tribute to the Argentine Government, although I never expected to see the day when the Argentine Government would be able to set an example to the British Government in liberal practices. However, that appears to be the case, because the Argentine Government have given facilities to Captain Galvao and the British Government have denied him the right to come to this country.
What are the excuses made by the Home Office? They were given by the Joint Under-Secretary in answer to a Question tabled by my hon. Friend the Member for Wednesbury. The hon. and learned Gentleman said:
it has never been our tradition to allow foreigners to come here to advocate insurrection against our allies…"—[OFFICIAL REPORT, 1st June, 1961; Vol. 641, c. 410.]
The advocacy of insurrection is a very wide term. A considerable part of the history of this country has been provided by persons who have come to this country to advocate insurrection against their own Governments, whether their own Governments happened to be allies of ours or not.
Perhaps we had the wrong spokesman from the Government—I do not wish to criticise the hon. Gentleman in that sense—but the Under-Secretary made it clear that the Home Office had consulted the Foreign Office before they took this action. The Under-Secretary then went on to plunge into historical analogies. When he was told that there were possible examples of this country having given shelter or having provided facilities for people to make speeches in this country in order to object against tyranny in their own countries, some of my hon. Friends referred to the case of Garibaldi. The Under-Secretary replied:
"…there is a considerable difference between the Portugal of today, which is a member of N.A.T.O., and the Italy of Garibaldi's time."—[OFFICIAL REPORT, 1st June, 1961; Vol. 641, c. 411.]
It is not a crime against the Italy of Garibaldi's time that Italy could not be a member of N.A.T.O., since N.A.T.O., of course, was not in existence then.
Let us see what was the comparison between the Portugal of today and the Italy of Garibaldi's time. One of the most famous statements ever made by a British Government on their attitude towards people who were attempting to oppose tyrannies in their own country was made in a famous passage given by Lord John Russell on 27th October, 1860, when he described the attitude of the British Government at the time when Garibaldi had been denounced as a pirate, in much the same terms as Captain Galvao has been denounced. Lord Russell said in that famous passage:
There appear [he said] to have been two motives which have induced the people of the Roman and Neopolitan States to have joined willingly in the subversion of their Governments. The first of these was that the Governments of the Pope and the King of the Two Sicilies provided so ill for the administration of justice, the protection of personal liberty, and the general welfare of the people, that their subjects looked forward to the overthrow of their rulers as a necessary preliminary to an improvement in their condition.
That is the description which Lord John Russell gave of the situation in Italy at that time, and I cannot see how anyone can deny that that could apply to the conditions and affairs in Portugal today.
Certainly it is the attitude taken by Captain Galvao—an attitude taken at grave risk to his own life on numerous occasions. He is, therefore, not a person to be sneered at, as certain hon. Gentlemen opposite sneered when questions about Captain Galvao were raised in the House.
It appears that the only reason why the Home Office has deserted the honourable traditions of this country in providing asylum and facilities for people of foreign countries protesting against tyrannies in their own countries is because they wish to crawl and curry favour with the Portuguese Government.
In the words of William Wordsworth, I say to the Government:
That an accursed thing it is, to gaze on prosperous tyrants with a dazzled eye.

12.9 a.m.

Mr. John Stonehouse: I congratulate my hon. Friend the Member for Ebbw Vale (Mr. Foot) for his initiative in raising this subject on the Adjournment tonight. Of the many disturbing aspects of this matter, not the least are the details of the reply of the

Under-Secretary on 1st June to the effect that the Foreign Office had to be consulted before a decision was made in regard to the granting of a visa to Captain Galvao. Why was the Foreign Secretary consulted about this visa? We can only assume that it was because he had been warned that the Portuguese authorities would regard it as an unfriendly act if Captain Galvao came to this country.
We understand also from the hon. and learned Gentleman's reply on 1st June that it is important
to bear in mind the circumstances in which he wishes to come, namely, to give lectures, and by whom those lectures are sponsored 
We all want the British public to be as well informed as possible about the situation in Portugal and, in particular, in Angola. How can we expect intelligent decisions to be taken about our policy towards Angola in the United Nations and elsewhere if we do not have access to the facts? What better man to inform us about the facts than Captain Galvao himself?
As my hon. Friend the Member for Ebbw Vale said, Captain Galvao has held many responsible positions in Angola, in the last of which, as Inspector-General, in 1947, he produced a really historic report. What are the reasons for not allowing Captain Galvao to come to inform the British public about his investigations? We are entitled to know in Britain what are the true circumstances in Angola.
There are many precedents for allowing distinguished leaders of movements in countries suffering from colonialism to come to this country and explain the situation to the British people. We do not have to go as far back as Garibaldi. There is the precedent of Habib Bourguiba who came here after the war and held lectures in this country although he was at the time the leader of a rebellion against French colonialism in Tunisia. We have the example now of Algerian rebel leaders in Britain who are given freedom of movement and who are able to address meetings and explain the facts of the situation in Algeria, where a war is in progress involving one of our closest allies in N.A.T.O. These Algerian leaders are even allowed to broadcast on the B.B.C.
What are the special circumstances which have influenced the Home


Secretary in his decision? We ask not to be fobbed with a series of evasive replies tonight. We want to know what is behind the refusal to allow Captain Galvao a visa to come to this country, and I hope that we shall have an adequate reply from the hon. and learned Gentleman.

12.12 a.m.

Mr. Hugh Delargy: What has happened within the last two years or so to make the Government change their mind in this matter? About two years ago, Captain Galvao came here. He came to this Palace. I had tea with him along with my hon. Friend the Member for Leeds, East (Mr. Healey). He spoke to other hon. Members. What has happened in the interim to make the Government change their mind? Why has this man suddenly become dangerous or criminal? What are the changed circumstances?

12.13 a.m.

The Joint Under-Secretary of State for the Home Department (Mr. David Renton): I am glad that the hon. Member for Ebbw Vale (Mr. M. Foot) has raised this matter this evening, for it gives me an opportunity to affirm yet again our traditional policy of granting asylum to political refugees and of allowing foreigners who are in this country to express themselves as freely as British subjects may. It enables me, also, to point out that that traditional policy of allowing foreigners to visit this country freely has certain necessary limitations.
Although the Home Secretary is not obliged to give his reasons for refusing visas, I shall be glad to explain in this case, in answer to the request to do so, why a visa was refused, and refused after proper consultation with my noble Friend the Foreign Secretary. First, I shall give what appear to me to be the essential facts about Captain Galvao, some of which have already been given by the hon. Member for Ebbw Vale.
As the hon. Member said, Captain Galvao was once in the service of the Salazar Government, but some time between 1947 and 1951 he had a serious disagreement with them over colonial policy and, as has been pointed out, he was in 1953 sentenced to three years' imprisonment for subversion. In 1958,

while he was still in preventive detention, he was sentenced to a further period, this time 16 years' imprisonment.
Early in 1959 he escaped from custody and sought political asylum in the Argentine Embassy in Lisbon, and was granted it. In January this year he led an armed group of 69 people who boarded the "Santa Maria", a Portuguese liner, apparently as ordinary passengers, at her last two ports of call. They seized the ship off Curacao, and did so by overpowering the crew of 300, who were unarmed. The conspirators killed the third officer and wounded several other members of the crew and made prisoner the captain.
General Delgado, who visited this country in 1959 and, while here, I should point out, made inflammatory speeches against the Portuguese Government.

Mr. Driberg: Quite right, too. Why not?

Mr. Renton: That is a matter of opinion; but he made them.

Mr. Driberg: Whom did they inflame?

Mr. Renton: At the time the "Santa Maria" was seized on the high seas General Delgado was in South America, and after the seizure he said he had given orders for it to take place. After the "Santa Maria" episode, Captain Galvao was given asylum in Brazil, and he still enjoys the hospitality of the Brazilian Government. So far as the British Government are concerned, there is, of course, no question of political asylum. That is not at issue tonight, because what happened was that Captain Galvao applied in May to the British Consul at Sao Paulo for a visa to visit this country and said the purpose was to give lectures during a period of ten to fifteen days. In other words, he applied for a visa for a short visit. He produced to our Consul a telegram from a Portuguese doctor in London called Veiga Pires, who is the leader of a group calling themselves the "Group of Portuguese Democrats in England". Their expressed aim is the overthrow of the present Government in Portugal.

Mr. Foot: Hear, hear.

Mr. Renton: On 16th May our Consul at Sao Paulo, on instructions from us, refused the visa. When the Home


Secretary and the Foreign Secretary considered this matter they naturally bore in mind our traditional policy, which is also our current policy, of normally allowing aliens to come here and to express themselves freely.
In parentheses, I should say that the distinction we make between those allowed to come for short visits and those granted permanent residence did not arise because this was merely an application for a short visit.
The Home Secretary and the Foreign Secretary had to bear in mind, among other things, that Portugal is a member of N.A.T.O. besides being our oldest ally. It was therefore necessary to consider Captain Galvao's real intentions in coming here. Was he coming here merely to give lectures in the accepted sense of the word, or was he proposing to do what General Delgado had done—namely to make most inflammatory speeches advocating insurrection against the Portuguese Government?
In deciding this matter, it was relevant to consider not only the experience which we had had with General Delgado and Captain Galvao's earlier history of disagreement with the Portuguese Government, but also—and here I come to the point raised by the hon. Member for Thurrock (Mr. Delargy)—his recent activities as leader of the armed conspiracy to capture the "Santa Maria." No reasonable person looking at the matter objectively could have doubted Captain Galvao's intentions, and, indeed, the speech of the hon. Member for Ebbw Vale plainly and candidly appears to justify those intentions, namely, that Captain Galvao should be allowed to come here in order to advocate the overthrow of the Portuguese Government.

Mr. M. Foot: The hon. and learned Gentleman's Department, rightly in my view, allowed into this country a large number of people from Hungary who fought against what they considered to be tyranny. Why will not he allow a Portuguese into this country who also wanted to fight against tyranny? He lets in one lot, why not Captain Galvao? And a number of the Hungarians also gave lectures in this country.

Mr. Renton: If the hon, Gentleman will allow me to continue, I think that he will follow the line of my reasoning.

Meanwhile, may I say in reply to his intervention that the Hungarians who came here asked for and were granted political asylum. It was clearly a case of political asylum. And also I think that surely there must be a distinction between the Government of Hungary at the time of the uprising, which was a Communist Government, on the one hand, and the Government of Portugal, a member of N.A.T.O., on the other. The main point about the men who came here from Hungary is that they were granted political asylum and, so far as I know, there were not the same circumstances as applied in Captain Galvao's case.
As I say, nobody looking into the circumstances of this matter objectively could have doubted Captain Galvao's intentions. As there was strong reason to suppose that he was going to advocate insurrection against the Government of a friendly ally, my right hon. Friend the Home Secretary decided that a visa should be refused.

Mr. Driberg: Will the hon. and learned Gentleman give way?

Mr. Renton: Comparison has been made between Garibaldi and Captain Galvao. My recollection is, in spite of what has been said by the hon. Member for Ebbw Vale, that the circumstances are utterly different. When Garibaldi came here in 1864 and was granted the freedom of the City of London and was received as a hero, he had already played the great part which he did play in the defeat of the Kingdoms of the two Sicilies and the establishing of the first Kingdom of Italy.

Mr. M. Foot: The hon. and learned Gentleman means that his subversion was successful.

Mr. Renton: The point is that he did not come here to advocate armed insurrection against the Government of a friendly ally.

Mr. Driberg: Really!

Mr. Renton: The achievements of Garibaldi had already been accomplished by the time that he came and, as the hon. Gentleman pointed out, it was an aim which had the sympathy and indeed I believe on one occasion the active help, of the British Government of that day.
However, my duty tonight is not to deal with the case of Garibaldi but with the case of Captain Galvao, and that I have done. The circumstances are perfectly plain, and for the reasons which I have given my right hon. Friend refused the visa.

12.25 a.m.

Mr. Eric Fletcher: We have had a most shocking statement from the Joint Under-Secretary, It is no wonder that he felt thoroughly uncomfortable in having to make it—

Mr. Driberg: He would not give way.

Mr. Fletcher: —in having to try to justify, as he was quite unable to do, the refusal of the Home Secretary to allow a visa for Captain Galvao. The hon. and learned Gentleman started by referring to the traditions of this country, but the attitude of the Home Secretary in refusing a visa is a complete negation of the whole traditions of the British Government through the centuries in allowing people to come here. He has not given a single reason why Captain Galvao should have been refused a visa for the perfectly legitimate and desirable purpose of coming here for a visit of fifteen days to give a series of lectures to the British public.
The British public want to know what Captain Galvao has to say. They are interested to hear what he has to say about the Portuguese Government, whether that Government is our oldest ally or not and whether it is a member of N.A.T.O. or not. This country is always anxious to hear anybody who comes from abroad to protest against tyranny. In my view—I think that the House will agree with me—it was contrary to all the traditions of British policy that a visa should have been refused.
The Joint Under-Secretary has made a series of lame excuses. He has not given one reason. This gentleman is entitled to come here. He is entitled to lecture. The Home Office has no right to assume that he is coming here for the purpose of fostering insurrection. Even if he did, it does not justify the action of the Home Secretary. It is a disgraceful decision that the Home Secretary has made, something which he should regret and which is contrary to all our traditions.
In view of the speeches which have been made in the House tonight and the general feeling in the country on this subject, I hope that the Home Secretary will reconsider the decision and will allow Captain Galvao to have a visa to come here so that the British public can hear what he has to say from his own knowledge about what is going on in Angola and about the actions of the Portuguese Government.

12.27 a.m.

Mr. Tom Driberg: If he is not already ashamed of it, I hope that the Joint Under-Secretary of State for the Home Department will be ashamed of his contemptible and shabby little speech when he reads it in the morning. What I particularly objected to in it was his misuse of words, or his use of words without sufficiently explaining what he meant. He kept on saying that inflammatory speeches had been made in this country by a previous visitor—General Delgado. Surely, inflammatory speeches by the thousand are made every week-end in Hyde Park. The point is, whom do these speeches inflame? Did they seriously inflame insurrection in Portugal at the time? Did they inflame the British public?
What does the hon. and learned Gentleman mean when he uses these emotive words like "inflammatory"? How does he then dare to go on and claim to be speaking objectively when he uses other emotive phrases such as "our oldest ally" and all that sort of claptrap? What does he mean by "objectivity"? The hon. and learned Gentleman should be ashamed of himself. His speech was a disgrace to the House of Commons.

12.28 a.m.

Mr. James Callaghan: I want to express my strong disapproval of the speech we have heard tonight from the hon. and learned Gentleman. He has no title or right to say that it is his job to protect the Portuguese Government. The interests of the British people are with the people of Portugal and not with the Government of Portugal. The people of Portugal are, as I know, simple, dignified and poverty-stricken and are living under a Government whose attitude of mind towards the problems of today is at least 200 years out of date. If we are


real friends of the Portuguese people, we would help those who want to bring them into the twentieth century and not try to retain in power by preventing the expression of opinion a Government which is so out of date as the Portuguese Government is.
The hon. and learned Gentleman's argument is in complete and flagrant defiance of our tradition of friendship with peoples of other countries as distinct from Governments of other countries. I think that on reflection, when the hon. and learned Gentleman thinks about this—and I hope he did before he came here tonight—he will not feel satisfied that it is sufficient to say that because a Government like Portugal is in N.A.T.O., whereas the Hungarian Government is a Communist Government, we differentiate between the two. That is no basis on which Government in this country or admission to this country should be based. I believe that the hon. and learned Gentleman in his heart knows this.
As an ordinary Member of the House, I deplore very much the hon. and learned Gentleman's departure from standards which, I believe, he has tried to adopt in the Home Office. I believe that left to himself, he would not have adopted this policy, but that it has been foisted on him by the Secretary of State for Foreign Affairs, Lord Home, who is trying to work out a policy that will maintain in power a reactionary and repressive Government in Portugal and that the Home Office has unwittingly—or, perhaps, wittingly—allowed itself to

be made a pawn in this game by the Foreign Office.
In so doing, the Government have departed from the traditions of ad- mission to this country of people who want to attack their own Government and to express their own views freely. I regret very much that the hon. and learned Gentleman has fallen below that standard.

12.30 a.m.

Mr. Renton: I wish to make it abundantly plain that this is a decision of my right hon. Friend the Home Secretary. He wishes me to make it plain that it is so. He naturally consulted his noble Friend the Foreign Secretary before making the decision, as it was perfectly right for him to do. I am astounded at the indignation which hon. Members opposite have expressed on behalf of a gentleman who, as all the world knows, has been guilty of—

Mr. F. Foot: Before the hon. and learned Gentleman casts any further slur on Captain Galvao, does he not think it a rather filthy Thing that he should come into this House to attack the reputation of Captain Galvao, a man who has risked his life for sixteen years to fight against Portuguese tyranny?

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to One o'clock.